S&P trims American Rock Salt

S&P said it lowered its ratings for American Rock Salt Co. LLC and its first-lien term loan to B- from B and its second-lien term loan to CCC from CCC+. The 3 and 6 recovery ratings, respectively, are unchanged.

“The downgrade reflects consistent periods of higher-than-expected leverage, which is likely to continue over the next 12-24 months. American Rock Salt's leverage could remain in the 8x-9x range in fiscal 2023 given our projection of relatively flat to a marginal decline in EBITDA.

“The company secured high-single-digit percentage price increases during the 2022-2023 highway de-icing salt tender season, compared to flat prices in the previous fiscal year. Although the price increases could normally be enough to offset inflationary pressures, we expect that a 10%-15% decline in volumes following a milder-than-expected 2022-2023 winter season will more than offset price increases,” the agency said in a press release.

S&P noted it sees the company delivering the cash flow needed to cover its capital expenditures and increasing interest costs, but not enough to “meaningfully” lower its debt.

The outlook is stable.

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