Moody’s changes Kenan outlook to stable

Moody's Investors Service said it revised the outlook of Kenan Advantage Group, Inc. to stable from negative.

Concurrently, the agency affirmed all ratings, including the B1 corporate family rating, B1-PD probability of default rating, as well as the Ba3 and B3 ratings of the senior secured credit facility and the $350 million senior unsecured notes due 2018, respectively.

Moody’s said the outlook revision reflects its expectation that the improvements in operating margins and cash flow generation that Kenan has demonstrated are sustainable and will result in credit metrics that are more supportive of the company's B1 corporate family rating.

Operating margins increased to almost 6% in 2014, from only 4.5 to 5% in previous years, calculated on a Moody's adjusted basis. At current levels of profitability, Kenan should be able to generate consistently positive free cash flow of around $15 to $25 million annually.

While leverage has been high due to Kenan's acquisitive growth strategy and past distributions to its shareholders, the agency anticipates Debt-to-EBITDA to be around 4.5 times in 2015, more in line with levels typically seen at the B1 rating category.

© 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.