S&P removes Orbcomm from watch

S&P said it affirmed its ratings for Orbcomm Inc., including its B- senior secured loan ratings, and removed them from CreditWatch where they were placed with negative implications on Nov. 1. The outlook is negative.

Sponsor GI Partners delivered funding to Orbcomm resolving a near-term cash shortfall and probably bridging its path to positive free operating cash flow in 2023, the agency said.

“Our view is supported by our forecast for earnings growth of about 60% in 2023 with modest FOCF because of increased device shipments. Orbcomm had about $5 million cash and $7 million of availability under the revolving credit facility due in 2026 as of Sept. 30, 2022. We expect the company to burn through about $15 million of FOCF in the fourth quarter of 2022 before cash flow turns positive in the first quarter of 2023,” S&P said in a press release.

The negative outlook reflects the risks the company faces in terms of increasing production and supply issues combined with a potential recession that could hurt demand, the agency said.

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