Moody's cuts Auris Luxembourg II

Moody's Investors Service said it downgraded the corporate family rating to B3 from B2 and the probability of default to B3-PD from B2-PD all issued at the level of Auris Luxembourg II SA. Concurrently, Moody's downgraded to B3 from B2 the instrument rating to the senior term loan (split into a €1.963 billion B1 tranche and a $1.235 billion B2 tranche) and downgraded to B3 from B2 the instrument rating to the €260 million senior revolver, all issued at the level of Auris Luxembourg III Sarl. The outlook on all entities remains negative.

Auris Luxembourg II is the entity consolidating the operations of WS Audiology, which was created following the completion of the merger between Sivantos and Widex.

The downgrade reflects the operating underperformance at both Sivantos and Widex since the announcement of the merger and limited merger synergies realized as of September notably because of delays in closing the merger coupled with higher than initially anticipated costs required in order to close the merger and realize the merger synergies. As a result, Moody's adjusted leverage deteriorated to 11.7x as of September from 9.1x as of April 2018 at the announcement of the merger.

Moody's downgrades Akorn

Moody's Investors Service said it downgraded the ratings of Akorn, Inc. including the corporate family rating to Caa3 from Caa1, the probability of default rating to Ca-PD from Caa1-PD and the senior secured term loan rating to Caa3 from Caa1. Moody's also downgraded the speculative grade liquidity rating to SGL-4 from SGL-3. Moody's revised Akorn's outlook to stable from negative.

On Feb. 12, Akorn's loan lenders extended a standstill agreement. As part of the agreement, Akorn will pursue a sale of its business, either on an out-of-court or in-court basis. The company disclosed it may use Chapter 11 protection in order to address unresolved litigation and to maximize value.

“The downgrade reflects the high risk of a near-term bankruptcy filing by Akorn, given its ongoing litigation and $845 million term loan maturity in April 2021. Akorn's business has stabilized, evidenced by a reduction in failure to supply penalties, and revenue and earnings are growing again. But it still faces challenges including outstanding FDA warning letters at its two main facilities, ongoing securities class action litigation and the risk that Akorn will not find a buyer by March 27, 2020, one of the milestone dates in the agreement,” said the agency in a press release.

The stable outlook reflects Moody's view the current ratings adequately reflect Akorn's refinancing risk and the elevated probability of default.

S&P trims Isagenix

S&P said it downgraded Isagenix Worldwide Inc. to CCC from CCC+. In addition, the agency also downgraded the rating on the company’s $415 million senior secured bank facility, which consists of a $40 million revolving credit facility and a $375 million term loan facility, to CCC from B-. S&P revised the recovery rating to 3 from 2, indicating the expectation for meaningful (50%-70%, rounded estimate: 65%) recovery in the event of default.

“The downgrade reflects our expectation for continued deterioration in operating performance for the combined company post-Zija acquisition, reduced liquidity and the likelihood the company could default absent an unforeseen positive development. Although the Zija acquisition is a leveraged-neutral transaction, Isagenix funded the transaction with a substantial draw on its revolver,” said S&P in a press release.

The negative outlook reflects the potential for a lower rating if a default, distressed exchange, or redemption appears to be inevitable within six months, the agency said.

Moody’s downgrades Seadrill

Moody’s Investors Service said it downgraded Seadrill Partners LLC’s corporate family rating to Caa3 from Caa2 and probability of default rating to Ca-PD from Caa2-PD. Concurrently, Moody’s downgraded the rating assigned to the senior secured term loan B due 2021 and borrowed by Seadrill’s subsidiaries Seadrill Operating LP and Seadrill Partners Finco LLC to Caa3 from Caa2. The outlook was revised to negative from stable.

Seadrill’s downgrade reflects that following a 50% reduction in order backlog in the past 12 months amid persistent challenging conditions in the deepwater and ultra-deepwater offshore drilling market, Moody’s said it expects the group’s operating profitability to continue to decline, free cash flow after capex and dividends to significantly become more negative and gross leverage to further increase during 2020.

Moody’s understands Seadrill has initiated talks with advisers representing certain lenders in relation to debt maturing during 2020 and the first quarter of 2021. This includes the $41 million tender rig, the $124 million West Polaris and the $161 million West Vela facilities maturing in June, July and October respectively, as well as the $2.6 billion term loan facility falling due in February 2021.

The negative outlook reflects the potential further deterioration in operating results and financial leverage amid Seadrill’s shrinking order backlog and considerable uncertainty as to the outcome of the refinancing negotiations, including the extent of the losses to be borne by lenders and the shape of the company’s future capital structure.

Moody’s upgrades Vistage

Moody’s Investors Service said it upgraded its ratings for Vistage International, Inc. including the company’s corporate family rating to B2 from B3 and the probability of default rating to B2-PD from B3-PD. At the same time, Moody’s affirmed the company’s senior secured first-lien credit facilities at B2 including the proposed $50 million first-lien term loan add-on. Moody’s upgraded the company’s senior secured second-lien term loan to Caa1 from Caa2. The outlook is stable.

Proceeds from the add-on will be used to prepay $50 million of Vistage’s second-lien term loan. The company is also upsizing its first-lien revolving credit facility to $40 million from $25 million. The affirmation of the first lien credit facilities at B2 brings it in line with the CFR to reflect the sizable amount of first-lien debt in the capital structure and related reduction in loss absorption offered by the second-lien term loan.

"The one-notch upgrade of the CFR reflects Vistage’s improved credit profile since its LBO in January 2018 over which time leverage has improved to 5.5x from 7.4x from steady earnings growth and debt repayment," said Moody’s lead analyst for Vistage Andrew MacDonald, in a press release. "Going forward, we believe that the company’s leverage will remain below 6x and will benefit from improved free cash flow following the repayment of second lien debt."

Fitch puts Bombardier on positive watch

Fitch Ratings said it placed Bombardier Inc.'s long-term issuer default rating and debt ratings on rating watch positive. The action follows the company's announcement it signed a memorandum of understanding to sell Bombardier Transportation to Alstom SA. The transaction is expected to close in the first half of 2021.

Fitch expects Bombardier's credit profile to benefit from the divestiture and other recent and pending divestitures, with the company to be focused on business aircraft. Cash from these transactions, combined with improving results expected at the aviation segment, should enable Bombardier to begin reducing leverage from a high level and generate higher margins and positive free cash flow.

Fitch expects to resolve the rating watch after reviewing the effect of the sale on Bombardier's ultimate debt structure, liquidity and operating profile. The sale will be subject to regulatory and other approvals, which could potentially affect final terms.

Moody’s revises Neustar view to negative

Moody’s Investors Service said it revised Neustar, Inc.’s outlook to negative from stable principally reflecting the deterioration in the issuer’s credit quality stemming from weak free cash flow trends in recent quarters that are unlikely to improve meaningfully over the coming year.

“The negative outlook reflects Moody’s expectation for nominal organic revenue growth and flattish adjusted EBITDA over the next 12 to 18 months. Significant adjustments to derive adjusted EBITDA should decline as cost savings are realized and non-recurring costs trend down. Accordingly, debt leverage is expected to hover around the 6x level ( nearly 7x when expensing capitalized software costs) and free cash flow is not expected to be meaningful with potential for modest deficits,” the agency said in a press release.

Moody’s affirmed Neustar’s B2 corporate family rating, B2-PD probability of default rating, the B1 ratings on the company’s first-lien bank facility and the Caa1 ratings on Neustar’s second-lien term loan.

Fitch puts ProAssurance on watch

Fitch Ratings said it placed ProAssurance Corp.'s subsidiaries BBB senior unsecured debt and BBB+ issuer default rating on rating watch negative.

The rating action follows the company's announcement to purchase Norcal Group for about $450 million with an estimated close by year-end 2020. The purchase price is being financed with a mixture of cash-on-hand and debt and contains a provision for additional payment should accident years 2020 and prior develop favorably.

Norcal is a mutual medical professional liability insurance specialist founded in 1975 and is unrated by Fitch. The company's underwriting performance and overall profitability have deteriorated sharply recently driven by significant adverse reserve development.

S&P rates Advantage Solutions loan, notes B-

S&P said it assigned B- ratings to Advantage Solutions Inc., its proposed first-lien loans and senior unsecured notes. The company, which is the parent of Advantage Sales & Marketing Inc., will be the financial reporting entity going forward.

The company is going to refinance the capital structure with proceeds from a $350 million asset-based revolver ($100 million drawn at close), a $1.525 billion senior secured first-lien dollar term loan, a $300 million senior secured first-lien euro term loan, $345 million of senior secured notes and $800 million of senior unsecured notes. The financial sponsor owners will contribute an added $200 million in common equity. Besides the B- ratings on the loans, S&P assigned 3 recovery ratings to the loans and a CCC rating with a 6 recovery rating to senior unsecured notes.

S&P revised the outlook to positive on the proposed refinancing. “The outlook revision to positive from negative reflects our view that the proposed refinancing will strengthen ASM's credit profile, as it addresses the company's nearing debt maturities and is modestly deleveraging. The equity contribution from ASM's financial sponsor owners gives us greater confidence that the deal will close with satisfactory terms,” said S&P in a press release.

Moody's rates American Airlines notes B1

Moody's Investors Service said it assigned a B1 senior unsecured rating to American Airlines Group Inc.'s $500 million of new unsecured notes due 2025. Subsidiary, American Airlines, Inc. will guarantee American Airlines Group's obligations under the notes indenture.

The proceeds are meant to be contributed to the company's pension plans. The Ba3 corporate family rating, which is assigned to American and stable outlook on the family are unaffected by the assignment of this rating.

S&P rates Aptos parent, loan B-

S&P said it assigned B- ratings to Aptos parent Aspen Jersey Topco LLC and its proposed $300 million first-lien term loan due 2027 along with a recovery rating of 3. The 3 recovery rating indicates the expectation for meaningful (50%-70%; rounded estimate: 55%) recovery in the event of default.

Aspen Jersey, created by a Goldman Sach private equity fund, is acquiring Aptos. The term loan will be used to partially finance the acquisition. Aspen Jersey also proposes issuing a $40 million revolver.

“The acquisition of Aptos by Goldman Sachs' merchant banking division from current sponsor Apax Partners, is viewed as a financial transaction and does not alter our view of Aptos' competitive position and overall business risk. Our assessment of Aptos continues to be constrained by its small scale, narrow end-market focus (exclusively retail), and relatively low recurring revenue base,” said S&P in a press release. Pro forma leverage at the close of the transaction is forecasted to be 8.4x.

The outlook is stable.

Moody's assigns B1 to Mattamy notes

Moody's Investors Service said it assigned B1 ratings to Mattamy Group Corp.'s proposed senior unsecured $500 million notes due 2030 and C$225 million notes due 2028. Mattamy's Ba3 corporate family rating, Ba3-PD probability of default rating and other senior unsecured notes ratings remain unchanged. The outlook remains stable.

The B1 rating assigned to Mattamy's senior unsecured notes, one notch below the Ba3 CFR, reflects the notes' junior position relative to the secured debt in Mattamy's capital structure.

Proceeds will be used to refinance Mattamy's senior unsecured $500 million notes and C$225 million notes, both due 2025. The leverage neutral transaction significantly enhances the company's maturity profile, with its next significant debt maturity (after the revolving credit facilities due 2021) not until 2027 when its $500 million 5¼% notes are due.

Fitch rates Bausch Health Americas facility, notes BB

Fitch Ratings said it assigned BB/RR1 ratings to Bausch Health Americas, Inc.'s secured bank revolver, secured term loan and secured notes offering.

The proceeds will be used to refinance its secured term loans and secured notes due 2022 and 2024. The refinancing extends the bank debt maturities by roughly two years and the secured notes maturities by about six years.

Fitch also affirmed the existing issuer default ratings and issue ratings for Bausch Health Cos. Inc. and Bausch Health Americas.

Moody’s assigns Catalent notes B3

Moody’s Investors Service said it assigned a B3 rating to Catalent Pharma Solutions, Inc.’s proposed €450 million senior unsecured notes due 2028. There are no changes to Catalent’s other ratings including the Ba3 senior secured bank credit facility. The outlook remains stable.

Proceeds will be primarily used to refinance its euro-denominated 2024 notes, pay fees and expenses, and for general corporate purposes.

Moody’s said it views the transaction as a credit positive as it will lower interest costs and extend Catalent’s debt maturity profile. The transaction will only slightly increase leverage which Moody’s estimates at 4.7x on a pro forma basis, which includes the recent $315 million acquisition of Mastercell Global Inc.

Fitch rates Citrix notes BBB

Fitch Ratings said it assigned BBB ratings to Citrix Systems, Inc.'s senior notes offering. The senior notes are pari passu with Citrix's existing senior unsecured debt.

The company plans to use the proceeds to repay certain amounts outstanding under the $1 billion of term loans Citrix incurred on Jan. 20, which the company used to fund the $1 billion accelerated share repurchase transactions that Citrix entered into on Jan. 30.

Fitch expects Citrix to use near-term FCF to repay any term loan balances not refinanced with proceeds from the senior notes. Pro forma for the senior notes offering and outstanding term loans Citrix does not refinance, Fitch said it rates $2 billion of total debt including the revolving credit facility.

S&P rates Freeport-McMoRan notes BB

S&P Global Ratings said it assigned its BB issue-level rating and 3 recovery rating to Freeport-McMoRan Inc.'s new $700 million senior unsecured notes due 2028 and $600 million senior unsecured notes due 2030. The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a payment default.

The company will use the proceeds to fund tenders to repurchase portions of its outstanding 4% senior notes due 2021, 3.55% senior notes due 2022, 3 7/8% senior notes due 2023, and 4.55% senior notes due 2024 and pay associated fees and expenses.

Moody’s rates Freeport-McMoRan notes Ba1

Moody’s Investors Service said it assigned a Ba1 rating to Freeport-McMoRan Inc.’s new guaranteed senior unsecured notes due in 2028 and 2030. The notes will be issued under the company’s well-known seasoned issuer shelf registration for senior unsecured debt securities. All other Freeport ratings remain unchanged as do the ratings for Freeport Minerals Corp.

Proceeds will be used to fund the purchase of the offers for the 4% senior unsecured notes due 2021, the 3.55% senior unsecured notes due 2022, the 3 7/8% senior unsecured notes due 2023 and the 4.55% senior unsecured notes due 2024. To the extent all of the 4% notes due 2021 are not tendered and purchased in the tenders, the company may use a portion of the remaining proceeds to redeem all or a portion of the remaining 4% notes due 2021 in accordance with the provisions of the indenture governing the notes.

"This transaction will contribute to refinancing near-term maturities and improve the debt maturity towers, particularly in 2022 and 2023," said Carol Cowan, a Moody’s senior vice president and lead analyst for Freeport, in a press release.

S&P assigns JHW CJF, loan B-

S&P said it assigned B- ratings to JHW CJF Holdings, Inc. and its proposed $325 million senior secured first-lien credit facilities, reflecting the expectation of a meaningful recovery in the event of a payment default (50%-70%; rounded estimate: 50%).

The company is the parent of C.J. Foods, Inc. S&P views the two as one economic entity for analytical purposes. JHW CJF is acquiring American Nutrition Inc. and refinancing its debt.

“Combined, the company will be one of the largest super-premium dry pet food contract manufacturers within the $32.4 billion pet food and treat space (Source: Euromonitor 2018). There are meaningful barriers to entry as the super-premium pet food manufacturing business requires significant capital investment to achieve scale and meet food safety standards,” said S&P in a press release.

The outlook is stable and reflects the expectation that C.J. Foods' leverage will remain high, but that it will restore organic revenue growth in-line with favorable industry trends, generate positive cash flow, and maintain adequate liquidity.

S&P rates Mattamy notes BB

S&P said it assigned its BB issue-level rating and 3 recovery rating to Mattamy Group Corp.'s proposed $500 million senior unsecured notes due 2030 and its C$225 million senior unsecured notes due 2028. The 3 recovery rating indicates expectations for meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a payment default.

Proceeds are expected to be used to repurchase or redeem all its outstanding 2025 notes and pay related fees and expenses.

The issuer credit rating on Mattamy Group is BB and the outlook is positive.

S&P rates Tosca Services, loan B

S&P said it assigned B ratings to Tosca Services LLC and its proposed $325 million first-lien term loan, inclusive of a $75 million delayed-draw, due 2027. The agency assigned a recovery rating of 3 (rounded estimate: 50%).

The term loan proceeds, along with an equity contribution of $188 million from Apax Partners, will fund the acquisition of Polymer Logistics LV and refinance the company's debt.

“Our B issuer credit rating on Tosca reflects its limited geographic diversity, high capital expenditure supporting organic growth, and small-scale narrow focus relative to peers we rate similarly,” S&P said in a press release.

The outlook is stable.

Moody's assigns Tosca, loan B2

Moody's Investors Service said it assigned first-time ratings to Tosca Services, LLC, including a B2 corporate family rating, a B2-PD probability of default rating, a B2 senior secured first-lien term loan rating and a B2 to the $75 million first-lien delayed draw term loan. The outlook is stable. The proceeds will be used to finance the acquisition of Polymer Logistics NV and to refinance debt.

“The B2 corporate family rating reflects the integration and operating risk inherent in the Polymer acquisition, small revenue base and projected weak free cash flow. The Polymer acquisition will almost double Tosca's revenue and bring a substantial international operation to a company that previously had none. Additionally, the acquisition will increase exposure to the more competitive European market. Leverage is low for the rating category, but free cash flow is projected to be weak as capex spending to support new business will remain elevated over the next 12 to 18 months,” the agency said in a press release.

Moody's assigns WMG Acquisition Ba3

Moody's Investors Service said it assigned to WMG Acquisition Corp. a Ba3 corporate family rating and Ba3-PD probability of default rating. Moody's affirmed WMG Acquisition’s senior secured notes and senior secured term loan ratings at Ba3 and upgraded the senior unsecured notes to B2 from B3. Moody's also withdrew the B1 CFR, B1-PD PDR and stable outlook from WMG Holdings Corp. WMG Acquisition's rating outlook is stable.

WMG Acquisition is a direct wholly owned subsidiary of WMG Holdings Corp. and an indirect wholly owned subsidiary of Warner Music Group Corp. Warner Music Group guarantees the note obligations at WMG Acquisition and produces consolidating financial statements that separately break out WMG Acquisition. Moody's transitioned the CFR to WMG Acquisition Corp. from WMG Holdings because WMG Acquisition Corp. is currently the senior-most debt-issuing entity within the corporate structure and Warner Music Group’s debts reside at WMG Acquisition.

The Ba3 ratings on the secured notes and term loan match the CFR to reflect the preponderance of secured debt in Warner Music Group’s capital structure (nearly 90%) and Moody's expectation that this secured class will remain the vast majority of debt over the rating horizon. The B2 rating on the senior unsecured notes reflects their lack of security interest in the collateral package and structural subordination to the secured debt obligations.

The Ba3 CFR reflects Moody's expectation WMG Acquisition's ultimate parent, Warner Music Group Corp. will generate 8%-10% revenue growth driven by continued strong secular adoption of digital music streaming services by consumers, especially in underpenetrated overseas markets. Moody's projects the parent will improve financial leverage and operate with total debt to EBITDA in the 4x area (as calculated by Moody's) by the end of 2020, buoyed by EBITDA growth and adjusted EBITDA margins improving to the upper end of the 16%-20% range (as calculated by Moody's).

S&P gives American Airlines notes BB-

S&P said it assigned its BB- issue-level rating and 3 recovery rating to American Airlines Group Inc.'s proposed $500 million senior unsecured notes due 2025. The 3 recovery rating indicates an expectation that lenders would receive meaningful (50%-70%; rounded estimate: 65%) recovery of their principal in the event of a payment default.

American Airlines Group Inc. is the parent of American Airlines Inc. The company will use the proceeds to fund contributions to its pension plan.

Existing recovery ratings are unchanged. The recovery ratings reflect the company's greater-than-expected amortization on its secured debt, which has increased the amount of collateral available for the unsecured noteholders in a simulated default scenario, S&P said.

Moody's gives Bausch Health facility Ba2

Moody's Investors Service said it assigned a Ba2 rating to the new senior secured term loan and revolving credit agreement of Bausch Health Americas, Inc., a subsidiary of Bausch Health Companies Inc. There are no changes to Bausch Health's other ratings including the B2 corporate family rating, the B2-PD probability of default rating, the Ba2 senior secured rating, B3 senior unsecured rating and SGL-1 speculative grade liquidity rating. The outlook remains unchanged at stable.

Proceeds will be used to repay term loans in a leverage neutral refinancing transaction. The refinancing is credit positive in that it will reduce Bausch Health's interest cost while extending the maturity profile, the agency said.

S&P revises Neenah view downward

S&P said it revised the outlook for Neenah Enterprises Inc. to negative from stable citing very low profitability.

“The negative outlook reflects the risk that Neenah’s leverage will rise above 5x if its operating performance is weaker than we expect. Given its recent operating challenges, we expect the company’s leverage to be in the 4.5x-5x range in fiscal year 2020 (ending Sept. 30, 2020). Our base-case forecast assumes that Neenah’s leverage will decline to the low- to mid-3x range by the end of fiscal year 2021 as its profitability in the industrial segment improves,” said S&P in a press release.

S&P affirmed Neenah’s B rating and the B+ on its first-lien term loan. The recovery rating of 2 is unchanged.

S&P shifts Conagra view to negative

S&P said it revised the outlook on Conagra Brands Inc. to negative from stable and affirmed all its ratings on the company, including the BBB-issuer credit rating.

“The negative outlook reflects the potential for a lower rating over the next 12 months if we unfavorably revise our view of the company's business risk profile, or if we believe the company will not be able to improve credit ratios in line with our base-case forecast, which includes reducing adjusted leverage below 4.5x by the beginning of calendar year 2021,” said S&P in a press release.

S&P said it indicated in its previous report on Conagra it would take a negative rating action on the company if its third-quarter performance trailed the agency’s expectations, which is viewed as possible given the tough conditions in its industry as well as its increased competition and inconsistent performance.

S&P revises Hawaiian Electric view to positive

S&P said it revised the outlook for Hawaiian Electric Industries Inc. and its utility subsidiaries to positive from stable. The subsidiaries are Hawaiian Electric Co. Inc. along with its two subsidiaries Hawaii Electric Light Co. Inc. and Maui Electric Co. Ltd.

The revised outlook reflects the potential for performance-based regulation reform measures to improve cash flow stability, predictability and profitability for Hawaiian Electric Industries and its regulated subsidiaries. Specifically, the proposed five-year rate plan provides a longer period for stable cost recovery and reduces frequencies of rate case filings compared with the current three-year rate plan.

The Hawaii Public Utilities Commission, the state's regulator, is conducting the second phase proceeding on performance-based regulation.

S&P also affirmed the companies’ BBB- issuer ratings.

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