Moody’s snips Electronics for Imaging

Moody's Ratings said it downgraded the ratings on Electronics for Imaging, Inc.'s backed senior secured first-lien bank credit facilities to Caa1 from B3 and assigned a Caa1 rating to the amended first-lien revolving credit facility. The agency also lowered EFI’s corporate family rating to Caa1 from B3 and its probability of default rating to Caa1-PD from B3-PD and revised the outlook to negative from stable.

“The downgrade reflects the weak liquidity position including near-term maturity of its revolver and challenges generating positive free cash flow. The recently amended revolver matures in April 2025 with step downs in December 2024.

“Additionally, the disadvantageous structure of the Fiery assets is a driver of the rating action and key governance risk. The sale of Fiery potentially allows a significant level of proceeds to be distributed to the equity owners which could leave the remaining company with an unsustainable capital structure unless the core inkjet business improves significantly,” Moody’s said in a press release.

After EFI's reorganization and separation of the Fiery business in 2021, the lenders have a guarantee and pledge of Fiery assets but only receive partial proceeds of a Fiery sale capped at the amount of Fiery preferred and 5% of Fiery common shares.

The agency noted that EFI’s debt to EBITDA based on 2023 results is just under 9x.

“The negative outlook reflects uncertainty over upcoming revolver maturities and cash flow and resultant liquidity pressures. Additionally, the sale of the Fiery assets without sufficient paydown of debt could negatively impact ratings,” Moody’s said.

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