Moody’s drops Capstone facilities, view negative

Moody's Investor's Service said it affirmed Capstone Logistics Acquisition, Inc.’s B3 corporate family rating, B3-PD probability of default rating and the Caa2 rating on the second-lien senior secured credit facility.

The outlook was changed to negative from stable, and concurrently, the agency downgraded the ratings on the first-lien senior secured revolver and first-lien senior secured term loan to B2 from B1 to reflect lower-than-expected recovery on first-lien debt.

Moody’s said the negative outlook reflects weaker than expected earnings, much of which is attributable to the Pinnacle acquisition of 2015 where pricing concessions with select customers and the loss of some sites, resulted in lower than expected contribution margins. The negative outlook also incorporates concerns around Capstone's highly leveraged balance sheet which constrains near-term financial flexibility.

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