S&P trims Orbcomm

S&P said it lowered all its Orbcomm Inc. ratings a notch, including its senior secured debt ratings to B- from B.

“We believe Orbcomm's leverage will likely remain elevated, at above 6x over the next year, with limited FOCF. Orbcomm's S&P Global Ratings-adjusted leverage increased to 8.2x in 2021 due to lower device shipments and subscriber growth because of the global chip shortage. As a result of component shortages and reduced device inventory, a larger portion of the devices Orbcomm shipped in 2021 were allocated to replacing existing customer devices operating on legacy 3G technology (ahead of its sunset in 2022), which limited its growth from new subscribers,” S&P said in a press release.

“We believe there is potential for improvement to the low-5x area in the 2023 but our rating also incorporates uncertainty around the timing and magnitude of the improvement in credit metrics.

the agency added.

The outlook is stable.

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