Moody’s reinstates, drops Hoover

Moody's Investors Service said it reinstated Hoover Group, Inc.'s corporate family rating at Caa1 and probability of default rating at Caa1-PD.

The reinstatements reflect the final debt capital structure and organizational structure following the merger of Hoover Container Solutions, Ferguson Group and CHEP Catalyst and Chemical Containers that formed a container solutions enterprise that rents, sells and services containers, work spaces and packaging products.

Concurrently, the B3 corporate family rating and B3-PD probability of default rating previously assigned to Hoover Group, Inc. (New) will be withdrawn as no rated debt exists at this entity. The rating actions effectively reflect the corporate family rating being downgraded to Caa1 from B3 and the probability of default rating being downgraded to Caa1-PD from B3-PD.

Additionally, the ratings on Hoover's bank credit facilities, including the $30 million revolver and $222 million term loan, were downgraded to B2 from B1.

The outlook is negative.

"The effective rating downgrade reflects Hoover's very high exposure to the stressed oil & gas industry that will further weaken liquidity and result in a prolonged period of high leverage and very weak interest coverage," Moody's analyst Prateek Reddy said in a news release.

"The negative outlook reflects the potential for further weakening of Hoover' liquidity and absent some stabilization in the end market, the capital structure could devolve into being untenable."

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