In November 2000, acquired Kohlberg, Kravis, Roberts (KKR), Rockwood Specialties, Inc., a specialty chemicals company, in a $ 1.2 billion buyout. Encouraged by the favorable market conditions in the first half of 2003 was considering KKR buyout debt refinancing in June 2003. Merrill Lynch, the underwriter proposes to refinance the previous loan, in part with a $ 375 million issue of subordinated bonds. Even though it’s been a favorable interest rate environment and a strong vo … Read more »

In November 2000, acquired Kohlberg, Kravis, Roberts (KKR), Rockwood Specialties, Inc., a specialty chemicals company, in a $ 1.2 billion buyout. Encouraged by the favorable market conditions in the first half of 2003 was considering KKR buyout debt refinancing in June 2003. Merrill Lynch, the underwriter proposes to refinance the previous loan, in part with a $ 375 million issue of subordinated bonds. Even though it’s been a favorable interest rate environment and a strong volume of debt financing in the first half of 2003, the Rockwood offer or put some big challenges. First, it was the first time issue by a private company. Second, KKR had surrounds the motivation for the offer and the complex financial structure, performed in a preliminary credit rating of Caa by Moody’s. Students are asked to evaluate and price the high-yield issue. The case describes how credit ratings, market conditions, and organizational structure affect returns. It is a short story of how the high-yield market from the mid-1980s developed until 2003.
This is a Darden case study.
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from
Susan Chaplinsky,
Kevin Kim
Source: Darden School of Business
23 pages.
Publication Date: Jul 07, 2004. Prod #: UV0115-PDF-ENG
Rockwood Specialties: High Yield Debt Issue HBR case solution