Fitch lowers ADT to junk on acquisition news

Fitch Ratings said it downgraded ADT Corp.’s issuer default rating to BB from BBB-.

The agency also said it placed the ratings on Rating Watch negative following news that ADT entered into a definitive agreement to be acquired by an affiliate of certain funds managed by affiliates of Apollo Global Management, LLC.

The agency also downgraded the rating on ADT’s outstanding $3.75 billion of senior notes to BB+ with recovery rating of RR2 from BBB-, along with the rating on its unsecured debt to BB with recovery rating of RR4 from BBB-.

The downgrades reflect an expectation that the company’s credit metrics will be meaningfully weaker following the acquisition, Fitch said.

The company’s debt-to-EBITDA ratio is likely to settle between 5x to 5.5x on a pro forma basis compared with 3x for ADT on a standalone basis for the 12 months that ended Dec. 31, 2015, the agency said.

ADT announced Feb. 16 that it agreed to be acquired by certain Apollo Funds for $42 per share, Fitch said, and the company is expected to be merged with Prime Security Services Borrower LLC.

The combined company will have total revenues of about $4.2 billion and $318 million of recurring monthly revenue with about 30% market share in the North American residential security market, Fitch said.

Fitch lowers Anglo American

Fitch Ratings said it downgraded Anglo American plc’s long-term issuer default rating and senior unsecured rating to BB+ from BBB-.

The outlook is negative.

The short-term issuer default rating also was downgraded to B from F3.

All of the ratings were removed from Rating Watch negative, where they were placed in December.

The downgrades follow the release of additional information on the group’s operational restructuring, which includes the sale of about 25 assets, Fitch said.

If completed, the company will become a materially smaller mining company focused on diamonds, copper and platinum, the agency said.

The negative outlook primarily reflects the high level of uncertainty regarding the ultimate success of the group’s restructuring plan, Fitch said.

Moody’s cuts Athabasca Oil Sands to Ba3

Moody's Investors Service said it downgraded Athabasca Oil Sands Investments Inc.’s senior unsecured rating to Ba3 from Baa3 and assigned a stable outlook.

The debt of Athabasca Oil Sands is guaranteed by Canadian Oil Sands Ltd. (Ba3 stable) and its senior unsecured rating is equivalent to the senior unsecured rating of Canadian Oil Sands.

This action resolves the review for downgrade that was initiated on Dec. 16.

Athabasca Oil Sands’ Ba3 corporate family rating is based on a guarantee from Canadian Oil Sands. Canadian Oil Sands’ Ba3 corporate family rating reflects its stand-alone credit profile of B2 and implicit support from its parent, Suncor Energy Inc. for which the agency attributes two notches of rating uplift.

S&P downgrades Erickson

Standard & Poor’s said it lowered the corporate credit rating on Erickson Inc. to B- from B.

The agency also said it lowered the rating on the company’s second-lien debt by two notches to B- from B+ and revised the recovery rating on its second-lien debt to 3 from 2, indicating 50% to 70% expected default recovery.

The outlook is negative.

The downgrade reflects the company’s weaker-than-expected revenues and earnings due to its exposure to the energy sector and continued reduction in U.S. Department of Defense contracts, S&P said.

These trends are expected to continue as oil prices will only increase modestly through 2017, the agency said.

The company’s credit metrics are expected to remain relatively stable rather than improve as previously expected, S&P said.

S&P downgrades Venoco to D

Standard & Poor’s said it lowered the corporate credit ratings on Venoco Inc. and parent company Denver Parent Corp. to D from CCC+.

S&P also said it also lowered the rating on the companies’ senior unsecured notes to D from CCC-. The recovery rating on all of the notes remains at 6, indicating 0 to 10% expected default recovery.

The D rating reflects news that Venoco has elected not to make the interest payment on its 8 7/8% senior notes due 2019, S&P said.

The agency said it doesn’t believe the company will not make this payment before the 30-day grace period ends March 17.

Moody’s ups UPM-Kymmene to positive

Moody's Investors Service said it changed the outlook on all ratings of UPM-Kymmene and its subsidiary UPM-Kymmene Finance BV to positive from stable.

The Ba1 corporate family rating, Ba1-PD probability of default rating, the Ba1 ratings on the various senior unsecured debt instruments and the provisional Ba1 senior unsecured medium-term note program ratings of UPM and UPM-Kymmene Finance were affirmed.

"Today's outlook change to positive reflects the achieved track record in financial performance and resilience of UPM's business model over the past years despite challenging economic conditions as well as our expectation of sustainability in recent performance improvements, that should allow the group to achieve and maintain credit metrics in line with an investment grade rating over the next 12-18 months," Matthias Volkmer, Moody's vice president, senior analyst and lead analyst for UPM, said in a news release.

"We note that UPM's strategy of profitable growth may incorporate sizeable investments as well as potential M&A but understand that management is unlikely to deviate from the current conservative financial profile until UPM's business mix has fundamentally changed to allow for a higher through-the-cycle financial leverage supported by stable profit and cash flow generation."

Moody’s upgrades Aperam to Ba1

Moody's Investors Service said it upgraded its ratings for Aperam SA, upgrading its corporate family rating to Ba1 from Ba2, probability of default rating to Ba1-PD from Ba2-PD and $200 million convertible euro bonds due 2020 to Ba2 from B1.

The outlook is stable.

Moody’s said the upgrade of the corporate family rating reflects the strong operational performance of the company over the last two years and the agency’s view that Aperam will be able to maintain its EBIT and EBITDA margins at current levels in 2016.

Moody's further believes that significant operational improvement will be sustained by the gains realized through the topline strategy, the expansion of the “Leadership Journey” and the positive development on anti-dumping measures in the European Union.

Despite the improvement in profitability, the agency said it remains vigilant on the development of market conditions in Europe and in Brazil with notably an increased pressure on base prices.

Moody’s raises Neff, loan

Moody's Investors Service said it upgraded Neff Rental LLC’s corporate family rating to B2 from B3 and its probability of default rating to B2-PD from B3-PD.

The company's senior secured second-lien term loan rating was upgraded to B3 from Caa1.

The speculative grade liquidity rating was affirmed at SGL-3.

The outlook is stable.

Moody’s said the upgrade reflects good leverage for the rating category with debt to EBITDA anticipated at about 4 times for 2015 (all ratios on a Moody's adjusted basis) and positive cash flow anticipated for the year. The upgrade also reflects the belief that the company's exposure to the oil and gas segment has declined to under 10%.

S&P lifts Standard Industries from junk

Standard & Poor's said it raised the corporate credit rating on Standard Industries Inc. to BBB- from BB+.

The agency also said it raised the ratings on the company's $1.1 billion 5 3/8% senior unsecured notes due 2024 and $1.1 billion 6% senior unsecured notes due 2025 to BBB- from BB+.

The outlook is stable.

The company's leverage measures are expected to remain in line with a significant financial risk profile in the next two years due to a forecast of improved employment, consumer confidence and higher housing starts in the United States, which will increase demand for roofing materials, S&P said.

The Icopal acquisition also will generate modest growth in sales and earnings in Europe for the company as that economy improves, the agency added.

S&P puts Physio-Control on positive watch

Standard & Poor’s said it placed the B corporate credit rating and issue-level ratings on Physio-Control International Inc. on CreditWatch with positive implications.

The CreditWatch placement follows news that Stryker Corp. plans to acquire Physio-Control in an all-cash transaction valued at about $1.28 billion, the agency said.

The ratings on Stryker also remain on CreditWatch with negative implications, S&P said.

The watch will be resolved and the ratings likely will be upgraded once the transaction is closed in the second quarter of 2016 and when its debt is redeemed, the agency said.

S&P puts Homer City on watch

Standard & Poor’s said it placed Homer City Generation LP’s B- issuer credit rating on CreditWatch with negative implications, along with the B+ rating on its senior secured notes.

The recovery rating on the notes remains at 1, indicating 90% to 100% expected default recovery.

The company’s financial performance could potentially weaken materially due to lower power prices in the PJM Interconnection power market, S&P said.

Persistently low natural gas prices have significantly reduced power prices in the PJM energy market, which will negatively affect Homer City’s financial performance, the agency said.

Homer City earns energy and capacity revenues from its single asset – a 1,884 megawatt coal-fired power plant located in western Pennsylvania, S&P said.

Along with revenue forecasts of revenues and cost of production based on current commodity-price assumptions, the agency said it also will consider any major maintenance requirements and its capital expenditures.

Moody’s revises General Motors to positive

Moody's Investors Service said it affirmed the Baa3 unsecured credit facility rating and the Ba1 senior note rating of General Motors Co. (GM) and affirmed the Ba1 senior note rating of General Motors Financial Co., Inc. (GMF).

The outlooks were changed to positive from stable.

"The positive outlook for GM reflects our expectation that the company will continue to strengthen its performance in North America and Europe, and that it will maintain a strong position in China. In addition, we expect that the company will continue to make progress in building an operating structure that can contend with the risk inherent in the global automotive sector," Moody’s senior vice president Bruce Clark said in a news release.

The sector's risks include: pronounced cyclicality; excess capacity; and the intense competitive pressure posed by as many as 10 auto manufacturers operating in each of the major regional markets, the agency said.

S&P rates Corporate Risk loan CCC+, notes CCC-

Standard & Poor's said it raised the corporate credit rating on Corporate Risk Holdings LLC to CCC+.

The outlook is negative.

The agency also said it assigned a CCC+ rating on the company's first-lien credit facilities, including the $60 million revolving facility due 2018, $275 million term loan due 2018 and $825 million notes due 2019.

S&P also said it assigned a CCC- rating on the $96 million second-lien notes due 2020.

The agency assigned a recovery rating on the first-lien facilities of 3, indicating 50% to 70% expected default recovery.

S&P also assigned a recovery rating of 6 on the second-lien notes, indicating 0 to 10% expected default recovery.

The agency said it raised the ratings on the company as it emerged from bankruptcy with about $700 million less debt.

The following pre-emergence debt, including the $480 million second-lien notes, $61 million third-lien notes, $22 million senior unsecured notes and $29 million senior subordinated notes was converted to equity.

The ratings on Corporate Risk reflects its highly leveraged financial condition and liquidity dependent on favorable business conditions to support its high post-emergence debt burden, S&P said.

The agency also said it considered the company's weak cash-flow forecast for 2016 and its less-than-adequate liquidity.

S&P rates J.M. Huber loans BB+

Standard & Poor's said it assigned a BB+ rating and 3 recovery rating to J.M. Huber Corp.'s senior unsecured credit facilities.

The company's credit facilities consist of a $300 million dollar-denominated revolving credit facility and $360 million dollar-denominated term loan A facility, $200 million incremental term loan A-1 facility and $220 million delayed draw incremental term loan A-2 facility.

The 3 recovery rating assigned to each facility indicates 50% to 70% expected default recovery.

The ratings reflect the company's fair business risk profile and intermediate financial risk profile, S&P said. This combination of scores maps to a BB+ anchor score, the agency said.

© 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.