Moody’s cuts Imperial Metals

Moody’s Investors Service downgraded Imperial Metals Corp.’s corporate family rating to Caa2 from Caa1, probability of default rating to Caa2-PD from Caa1-PD and senior unsecured rating to Caa3 from Caa2. The speculative liquidity rating was lowered to SGL-4 from SGL-3. The outlook was cut to negative from positive.

Moody’s said the action reflects Imperial’s announcement that production will not meet its guidance and that the company will breach bank covenants, require additional financing and review strategic alternatives.

Imperial’s capital structure is likely untenable, Moody’s said, with LTM adjusted debt/EBITDA around 12x, nearly all of its C$800 million of debt due in less than two years, its assertion it will not meet its bank covenants, continuing negative free cash flow and a lack of liquidity, and the company’s announcement that it is considering strategic alternatives.

Though the Red Chris mine has been in commercial production since July 2015 and the Mount Polley mine resumed normal operations in June 2016 following its tailing dam breach, copper production at both sites has been lower than guidance and Imperial is in the process of revising mine plans at each operation.

Moody’s cuts True Religion on Chapter 11

Moody’s Investors Service downgraded True Religion Apparel, Inc.’s Probability of Default Rating to D-PD from Caa3-PD and its second lien term loan rating to C from Ca and affirmed its Corporate Family Rating at Ca and first lien term loan at Ca. The outlook remains negative.

It then withdrew all the ratings and the outlook.

The action follows True Religion’s Chapter 11 filing.

Moody’s affirms TurboCombustor at Caa1

Moody’s Investors Service affirmed its ratings on TurboCombustor Technology, Inc. including the corporate family rating at Caa1, the probability of default rating at Caa2-PD and the senior secured term loan at Caa1. It also assigned a Caa1 rating to the senior secured revolver due December 2020, following a maturity extension from December 2018. The outlook is stable.

Moody’s said the rating reflects TurboCombustor’s small scale, high financial leverage, tight liquidity profile and pronounced customer concentration.

It anticipates weak credit metrics through the end of 2018 as the company continues to face a number of earnings headwinds including high restructuring and new product introduction costs, elevated scrap rework charges and declining sales from legacy platforms.

At the same time, TurboCombustor has content on several key engine platforms that will dramatically ramp up in production over the next 18 to 24 months.

The stable outlook acknowledges TurboCombustor’s sizable content on key growth engine platforms which is expected to translate into topline growth and a gradual improvement in credit metrics over the intermediate term.

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