Moody’s eyes Acadia for upgrade

Moody’s Investors Service said it placed Acadia Healthcare Co., Inc.’s ratings on review for upgrade, including its B2 corporate family rating and B2-PD probability of default rating. Moody’s also placed Acadia’s senior secured ratings upgrade at Ba2 and its senior unsecured ratings at B3 on review for upgrades.

The agency upgraded Acadia’s speculative grade liquidity rating to SGL-1 from SGL-3 and placed Acadia’s outlook on review.

The rating action follows the completion of Acadia’s sale of its U.K. operations to Waterland Private Equity for about £1.078 billion, the agency said.

“This transaction is credit positive because it will facilitate deleveraging and rid the company of a challenged business. These benefits more than offset the significant loss of scale and geographic diversity as a result of the divestiture, ” said Jonathan Kanarek, a Moody’s vice president-senior credit officer, in a press release.

The change in the SGL rating to SGL-1 reflects its successful divestiture of a large yet challenged business and the expectation Acadia will generate consistently positive free cash flow over the next 12-18 months while maintaining good cash balances and significant access to its revolving credit facility, the agency said.

Moody’s said the review process will focus on Acadia’s new capital structure and any potential financial policy changes.

Moody’s cuts LogMeIn first-lien facilities

Moody’s Investors Service said it downgraded LogMeIn Inc.’s first-lien senior secured credit bank credit facility and first-lien senior secured bond ratings to B2 from B1.

The downgrades reflect the erosion in junior debt cushion available to first priority lenders due to the company’s plans to refinance $200 million of second-lien term loans with proceeds from $200 million of incremental first-lien term loans, Moody’s said.

Concurrently, the agency affirmed LogMeIn, Inc.’s B2 corporate family rating, B2-PD probability of default rating and the second-lien term loans’ Caa1 rating.

The outlook is stable.

S&P trims Terra-Gen

S&P said it lowered Terra-Gen Finance Co. LLC’s issuer rating to CCC+ from B- and its senior unsecured notes to B- from B. The 2 recovery rating on its senior secured term loan remains unchanged, indicating expectations for substantial (70%-90%; rounded estimate: 85%) recovery in default.

“The downgrade reflects the company’s near-term refinancing risks. Terra-Gen successfully extended the maturity of its $20 million revolving credit facility to Oct. 31, 2021, albeit with total availability $2.5 million lower than the previous availability. Despite its successful revolver maturity extension, we believe that the company has limited time and liquidity to refinance its term loan, which matures in December 2021,” S&P said in a press release.

The agency also revised the outlook to developing from negative. The new outlook reflects the probability S&P may lower or raise the rating, depending on whether Terra-Gen successfully refinances its December term loan and generally maintains consistent operating performance, the agency said.

S&P ups AMC Entertainment

S&P said it raised its issue-level rating on AMC Entertainment Holdings Inc.’s first-lien debt to CCC from CCC- and revised the recovery rating to 2 from 3. The 2 recovery rating indicates an expectation for substantial recovery (70%-90%; rounded estimate: 75%) in default.

On Tuesday, AMC raised an added $305 million via its at-the-market equity program, and Silverlake Group LLC converted the $600 million of 2.95% first-lien secured convertible notes issued by AMC into equity, which settled on Jan. 29.

“This conversion reduced the amount of first-lien debt in the company’s capital structure and improved the recovery prospects for its other first-lien lenders. As such, we raised our issue-level rating and revised our recovery rating on AMC’s first-lien debt,” S&P said in a press release.

S&P raises Atotech

S&P said it upgraded Atotech U.K. Topco Ltd.’s issuer rating to B and its debt ratings by a notch.

“Upgrading Atotech to B reflects our understanding that its 2020 operating and financial performance was supportive of the rating, and our expectation that its metrics will continue to recover in 2021. Although Atotech has yet to report its full financials for 2020, we anticipate a muted impact from the pandemic. The pandemic put Atotech under less pressure than we had initially anticipated,” S&P said in a press release.

The agency also placed Atotech’s ratings on CreditWatch with positive implications since its parent plans to sell shares in an IPO and repay several outstanding notes.

“The CreditWatch reflects a one-in-two likelihood of us raising the issuer credit rating by one notch. We expect to resolve the CreditWatch in the coming three months once we obtain more visibility about Atotech’s commitment to maintaining lower leverage upon completion of the IPO and a track record of S&P Global Ratings-adjusted EBITDA margin above 28%,” S&P said.

S&P shifts Signet Jewelers view to positive

S&P said it revised Signet Jewelers Ltd.’s outlook to positive from negative and affirmed its B+ issuer rating.

The outlook reflects Signet’s improving credit metrics due to better-than-expected operating performance and balance-sheet deleveraging. Performance gradually improved over the last few months following the initial damage caused by the pandemic, the agency said.

Increased cash flow enabled Signet to repay all its revolver borrowings, further improving its S&P Global Ratings-adjusted credit protection metrics relative to the agency’s prior estimates, S&P said.

The agency said it could raise Signet’s ratings over the next 12 months if it continues to improve operating performance, maintains leverage in the 3x area on a sustained basis and adequately addresses preferred share interest.

S&P revises Weekley view to positive

S&P said it revised Weekley Homes LLC’s outlook to positive from stable and affirmed the BB- ratings on the company and its senior unsecured notes.

“Weekley Homes’ credit profile continues to improve sharply. We forecast 2021 EBITDA to rise by about 5%, compared to the 2020 jump that we now estimate at close to 55%. Driven by a combination of sales volumes and margin improvements, we believe these profit increases are more sustainable than price increases, in our opinion. Moreover, debt declined by about $50 million this past September, after the prepayment of long-dated notes and the issuance of its 2028 bonds – its only tranche of recourse debt outstanding,” S&P said in a press release.

The agency said it bases the outlook on its forecast Weekley’s debt to EBITDA will remain below 2x and debt to capital trends toward 30%.

Fitch shifts Southwestern Energy view to stable

Fitch Ratings said it revised Southwestern Energy Co.’s outlook to stable from negative.

“The outlook revision to stable reflects Fitch’s belief that the Montage acquisition has been successfully integrated. In addition, near-term leverage metrics are expected to improve to BB rating tolerances over the forecast under Fitch’s base case price deck, and current strip pricing assumptions. Southwestern has proven its ability to access debt capital markets and has sufficient runway in addressing debt maturities,” Fitch said in a press release.

Concurrently, the agency affirmed Southwestern’s BB issuer rating, its senior secured revolver at BBB-/RR1 and senior unsecured notes at BB/RR4.

S&P rates LABL loans B

S&P said it gave a B issue-level rating and 3 recovery ratings to LABL Inc.’s planned senior secured $632 million term loan and €500 million term loan, both due July 1, 2026. The 3 recovery rating indicates expectations for meaningful (50%-70%; rounded estimate: 55%) recovery in default.

LABL is issuing the debt via an amendment to its July 1, 2019, credit agreement, and the proceeds will be used to redeem term loans fully.

“With the applicable margins on its term loans reduced at least 50 basis points pro forma for the refinancing, we believe the company may save almost $8 million in annual interest expense. We expect the transaction to be leverage-neutral and for the company to continue to improve upon its highly leveraged capital structure,” the agency said in a press release.

S&P’s other LABL ratings are unchanged, the agency said.

Fitch assigns Silgan BB+

Fitch Ratings said it assigned Silgan Holdings Inc. a first-time BB+ long-term issuer default rating. Also, Fitch assigned BBB-/RR1 senior secured ratings and senior unsecured ratings of BB+'/'RR4.

“The ratings reflect its leading positions within the North American metal food and rigid plastic container markets, its growing closures segment, as well as stable end markets, history of positive FCF generation, and adherence to a 2.5x-3.5x net debt financial policy post-acquisitions,” the agency said.

Fitch said it forecasts Silgan generating annual FCF, after dividends and working capital, in the $250 million to $350 million range over the next several years, which will allow a reduction in leverage from the 4.2x gross debt/EBITDA (3.7x net) estimated at year-end 2020 to below 3.5x (approaching 3x net) at year-end 2022.

“Credit concerns include management’s strategy to fund additional closures acquisitions with debt and the potential for shareholder pressure to increase returns. Fitch recognizes, however, the credit is supported by management’s long-standing conservative financial policies, which Fitch expects will continue to accommodate modestly-sized M&A and shareholder return activity,” the agency said.

The outlook is stable.

S&P gives Acrisure notes B

S&P said it assigned its B debt rating to Acrisure LLC’s eight-year senior secured notes offering. The recovery rating is 3, indicating expectations for meaningful (50%-70%; rounded estimate: 50%) recovery default.

The ratings on Acrisure Holdings Inc. and its core subsidiaries, including its B long-term issuer credit ratings, B first-lien credit facility debt ratings, and CCC+ unsecured debt rating, are unaffected by the new senior secured notes issuance, S&P said.

Proceeds are expected to be used to refinance its senior secured notes due 2024.

Acrisure also seeks to raise $700 million of incremental debt via a fungible add-on to its term loan. “We expect the company to use those proceeds to partly refinance its existing senior secured notes due 2024 and to fund future acquisitions,” the agency said in a press release.

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