Moody's downgrades Apex

Moody's Investors Service said it downgraded Apex Tool Group, LLC's senior secured first-lien bank credit facility to B2 from B1, the corporate family rating to Caa1 from B3, the probability of default rating to Caa1-PD from B3-PD and changed the outlook to negative from stable. Moody’s also affirmed the Caa2 rating on the senior secured second-lien term loan due 2030.

"Apex's funds from operations will likely remain negative in 2023 before the positive impact from working capital," said Motoki Yanase, a Moody’s vice president and senior credit officer, in a press release.

"This indicates a limited ability to service debt repayment without relying on working capital sources, which can be volatile," added Yanase.

"The downgrade also considers the company's weak liquidity, with limited availability under the existing revolver and the newly added securitization program," further added Yanase.

The weakened outlook reflects an expectation that Apex's profit and cash flow generation will erode over the next 12-18 months, Moody’s said.

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