Case Summaries · Stressed credits

Archroma pulled off a make-or-break A&E with some PIK creativity

Archroma pushed about $1bn of term loans due June 2027 out to 2030 and threw in a $200m second lien, half paid in kind, to get it over the line. The deal took more than a month, with a $37m fraud disclosed midway through syndication.

By EURx · 9 October 2026

Key details

Company: Archroma Holding S.a.r.l. Textile, paper and emulsions chemicals, carved out of Clariant in 2013
Deal: Amend and extend of about $1bn of term loans due June 2027, closed on 6 May 2026
New debt: All due 2030: a €537m (about $631m) euro TLB and a ~$218m dollar TLB, both at +550bps / 99 OID, plus a $200m second lien due September 2030 at SOFR+950bps / 97 OID, of which 550bps is paid in cash and 400bps in kind
Revolver: Cut from $225m due March 2027 to $170m, split into $125m due December 2029 and $45m still due March 2027
Exit fee: 1% on the $846m-equivalent of euro and dollar TLBs
Ratings: Moody's B3, S&P B-, Fitch B-
Owner: SK Capital (since 2013); General Atlantic and Koch hold about $575m of preferred equity certificates (PECs) from the Huntsman deal

How we got here: two debt-funded textile deals, then an industry downturn

SK Capital carved the textile chemicals, paper specialties and emulsions businesses out of Clariant in 2013, renaming it Archroma. In 2015 it bolted on BASF's global textile chemicals business, adding $515m of new debt. In 2017 SK ran a sale process for more than six months, didn't sell, opting to recapitalise the company instead.

The biggest move came in 2022, when Archroma agreed to buy Huntsman's Textile Effects division for an EV of ~$718m (incl pension liabilities), or around 7.6x EBITDA. Management called it a merger of equals, and the combined group had more than 5,000 staff and 35 production sites.

2024 was already tight. S&P affirmed Archroma at B with a negative outlook in November 2024. Integrating the Huntsman business cost about $86m that year, $50m more than budgeted, and with about $117m of cash interest and a $36m Swiss pension payment, free operating cash flow came in around minus $75m. S&P put leverage at 14.5x to 15.0x including the third-party PECs, or 8.5x to 9.0x without them. General Atlantic and Koch put in about $575m of PECs at the time of the Huntsman deal (our estimate, backed out from EBITDA at the time and the roughly 4x to 4.5x gap the agencies show between leverage with and without them). S&P's FY24 gap of about 6x on $132m of EBITDA implies roughly $790m, so the PECs look to have accreted a fair bit through their preferred dividend. The revolver, upsized to $225m and pushed to March 2027 alongside the 2023 term loan extension, had only $52m undrawn at September 2024. Archroma tried to reprice the euro term loan that year but pulled it, citing market conditions, and in December placed a €100m add-on at 99.5 instead, using the proceeds to pay down revolver drawings.

Subsequent weakness in key end markets (textiles, packaging and paper), plus wider pressure on European chemicals, began weighing on performance; by October 2025 the loans had fallen to around 74 cents, and lenders began exiting (and distressed funds started paying attention). S&P cut the group to B- on 1 December 2025, citing weaker credit metrics. Fitch noted gross leverage at 8.1x EBITDA as of September 2025 year end, after a weak macro backdrop, tariffs and recurring restructuring charges hit earnings. EBITDA margin was 8.5% in 2025, and textile effects (former Huntsman business) accounted for ~74% of FY25 EBITDA. In other words, the Huntsman deal added debt and doubled textile exposure just before demand weakened.

A January earnings update showed signs of life and opened the refi window

On the back of Archroma's preliminary results in January, which showed a gradual recovery in profit and cash flow, it began sounding out lenders about tackling its maturities. The company’s current debt load, primarily comprised of a €555m and $340m TLB (priced in March 2023, when Archroma extended its term loans after the Huntsman deal, with the euro loan at €455m until the December 2024 add-on), were due in June 2027, so practically speaking the company needed to find a solution by June (before the debt became current).

First-lien lenders got a smaller tranche / wider margin

Archroma didn't refinance its first-lien debt like for like. It extended $846m of it and raised $200m of second-lien debt to repay the rest. The euro TLB came back at €537m and the dollar TLB at about $218m (down from $340m). Both pay 550bps over their benchmarks at a price of 99 (versus initial talk at 500-525bps / 99 OID) and both carry a 1% exit fee.

Creativity came via the addition of a $200m second lien tranche, which priced at SOFR plus 950bps (initial price talk 900-925bps) and 97 OID, with the nuance being that only 550bps is paid in cash and the other 400bps is paid in kind (PIK). Uncommon to see PIK in regular-way A&Es, which again spoke to the inherent challenges of getting the deal over the line and clear demand from lenders to see the company conserving cash. The second lien was taken up by the same investors that hold Archroma's third-party preferred equity, Koch and General Atlantic, with no overlap with the first-lien lenders. That moves them from equity that sits outside the restricted group into secured debt that ranks ahead of SK Capital.

Interestingly, total debt (based on our calcs) actually grew in this A&E. At Bloomberg's implied exchange rate, the two new TLBs total about $849m against roughly $992m before, so about $143m of first-lien debt was taken out (about $122m from the dollar TLB and only €18m, or about $21m, from the euro TLB). The $200m second lien more than covers that, ie total term debt increased by ~$57m (before fees).

Pricing of the two new loans reflects liquidity (though neither seems to be particularly liquid at the moment). As of October the euro TL is around 95 cents (up from low 70s at peak stress / uncertainty pre A&E) and the smaller dollar TL is in the high 80s, up from around 74 cents on the euro loan in October 2025.

Fitch's recovery work shows how thin the cushion under the new second lien is. It values Archroma as a going concern at 5x a $150m EBITDA, or $750m, and assumes the $170m revolver is fully drawn and ranks alongside the $846m of term loans and $17m of local debt. By our calcs, after Fitch's 10% deduction for administrative claims, that leaves about $675m against roughly $1,033m of senior secured claims, or about 65 cents on the first lien, which fits the RR3 recovery rating Fitch gives it. On those numbers nothing reaches the $200m second lien (again our calcs).

Fitch calls liquidity adequate but says the fraud weakened it for a while. At the end of December 2025 Archroma had $171m of cash and $93m undrawn on its revolver, and it aims to keep about $120m of cash at all times. The revolver was cut from $225m to $170m and mostly pushed to December 2029, but a $45m piece is still due in March 2027.

What to watch before 2030