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Moody’s rates Enerflex B1, notes B2
Moody's Investors Service said it assigned a B1 corporate family rating, B1-PD probability of default rating, a B2 rating to the planned $625 million first-lien last-out secured notes due 2027 and a speculative grade liquidity rating of SGL-3 to Enerflex Ltd. The outlook is positive. Moody's has not rated Enerflex before.
The agency said it forecasts Enerflex’s debt to EBITDA to be under 3x by year-end 2024. It also noted the company’s recurring revenue streams, including the high-margin rental business with a substantial contribution from fee-based contracts, international geographic presence and vertical integration providing good revenue diversification and good liquidity.
Counterbalancing these pluses, Moody’s said are the risks of merging with Exterran Energy Solutions LP, industry cyclicality, high capital intensity for large projects pressuring cash flow and geo-political risk.
The notes are rated a notch under the issuer because they are junior to Enerflex’s $700 million revolver and $150 million term loan, the agency said.
The proceeds will be used to refinance debt at both companies in connection with the business combination of both companies in an all-share transaction.
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