Moody's downgrades Southern Graphics

Moody's Investors Service said it downgraded Southern Graphics Inc.'s corporate family rating to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD and the on its senior secured second-lien term loan to Caa3 (LGD 6) from Caa2 (LGD 6).

The outlook is stable.

The ratings reflect the company's elevated risks associated with very high leverage and weak interest coverage in a challenging industry environment with softness in volumes and pricing pressures, Moody's said.

The agency said it expects modest continued organic revenue declines over the next 12 to 18 months, the agency said.

However, the impact to EBITDA will be partially offset as savings from cost reduction initiatives are realized, enabling Southern Graphics to maintain double-digit EBITDA margins, albeit at a lower level of EBITDA, Moody's said.

The agency said it expects free cash flow will be suppressed in 2019 due to further upfront cash spend for restructuring and strategic initiatives, the agency said.

Moody's also said it expects Southern Graphics will maintain adequate liquidity over the next twelve months.

© 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.