Moody’s downgrades Southcross

Moody's Investors Service said it downgraded Southcross Energy Partners, LP's corporate family rating to Caa2 from Caa1, probability of default rating to Caa2-PD from Caa1-PD, senior secured term loan rating to Caa2 from Caa1 and speculative grade liquidity rating to SGL-4 from SGL-3.

At the same time, Moody's confirmed all of the ratings of Southcross Holdings Borrower LP, including the Caa3 corporate family rating, Caa3-PD probability of default rating and Caa3 term loan ratings.

The outlook was changed to negative from ratings under review for upgrade for both Southcross entities.

This concludes the review that was initiated on Nov. 1, 2017 following the announcement that American Midstream Partners, LP would acquire 100% of Southcross for a total consideration of $815 million.

Southcross terminated the plan of merger agreement effective July 29 and will receive a $17 million in termination fee from American Midstream.

"The downgrade reflects the high degree of uncertainty surrounding Southcross' business prospects, cash flow recovery and liquidity following the failed merger with American Midstream," Sajjad Alam, Moody's senior analyst, said in a news release.

"Southcross has very high financial leverage and weak liquidity, and the company will need to extend its revolver maturity, amend financial covenants, sell assets or inject equity to restore financial flexibility and remain a viable business over the long run."

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