Moody's affirms Great Lakes Dredge

Moody's Investors Service said it affirmed Great Lakes Dredge & Dock Corp.'s corporate family rating at B3 and senior subordinated notes at Caa1 (LGD5) and changed the loss-given-default rate assigned to the notes to 72% from 78% in anticipation of the planned refinancing of the company's senior secured debt facilities.

The outlook is stable.

The agency said the ratings reflect its belief that Great Lakes' markets remain exposed to a meaningful level of demand risk - fluctuations in the size of annual bid markets and in the company's bid market share could easily absorb the relatively small cushions in the current supportive credit metrics. In addition, demand from the U.S. Army Corp of Engineers, the domestic sector's largest customer, remains constrained due to funding constraints related to the U.S. government's annual budget, to the centralization of the company's contract funding authorizations and to restrictions on letting of contracts that are not fully funded.

Great Lakes recently announced plans to acquire a large hydraulic dredge and a large hopper dredge in two separate transactions, collectively valued at $63 million. These investments will be funded partially from drawings on a planned new senior secured revolving credit facility (not rated) and by a new operating lease. As a result, Moody's estimated that the debt-to-EBITDA ratio will increase from 4.7x at Dec. 31.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.