Moody's rates MD America loan Caa2

Moody's Investors Service said it assigned a Caa2 corporate family rating, a Caa2-PD probability of default rating and an SGL-3 speculative grade liquidity rating to MD America Energy, LLC and a Caa2 (LGD 3, 49%) rating to its $525 million secured term loan due 2019. The outlook is positive.

The proceeds from the proposed term loan will be used to repay revolver drawings, to repay the company’s existing senior secured and PIK notes and to add cash to the balance sheet for general corporate purposes.

The agency said MD America's ratings are constrained by its small size, its limited drilling inventory and execution risk related to its need to do acquisitions.

In Moody’s view, these risks offset the benefits of the company's high unleveraged cash margins and the financial sponsorship of its Chinese-based parent company, Meidu Holding Co., Ltd.

The positive outlook is based on the agency’s expectation that MD America will raise adequate financing through equity sponsorship from its parent company and execute on its development plans in the Woodbine formation, which would result in higher production levels and lower leverage on debt/production from current high values and provide additional capital to fund potential acquisitions.

© 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.