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S&P lowers Eco-Bat view to negative
Standard & Poor’s said it revised the outlook on Eco-Bat Technologies Ltd. to negative from stable.
The CCC+ long-term corporate credit rating was affirmed.
S&P also said it affirmed the CCC+ rating on the €300 million senior unsecured notes held by Eco-Bat Finance plc due February 2017. The recovery rating is unchanged at 3, indicating 50% to 70% expected default recovery.
The outlook revision reflects an opinion that EB Holdings II, Inc., Eco-Bat’s parent and 87% owner, is likely to default or restructure its estimated £1.2 billion payment-in-kind loan due March 2017.
S&P said it revised down the assessment of EB Holdings II’s group credit profile to CCC from CCC+, signaling a likely event of default at the parent company within the next 12 months.
The CCC+ ratings on Eco-Bat are one notch above the group credit profile on EB Holdings II, although lower than the B+ anchor because the agency said it cannot rule out that a potential default or loan restructuring would adversely affect Eco-Bat’s credit profile.
Eco-Bat’s liquidity also is re-assessed as less-than-adequate given the eurobond maturity and potential calls for a dividend to cover the parent’s PIK loan maturity within the coming 12 months, S&P said.
The agency said it continues to take into account, however, that there is no cross-default between Eco-Bat and its parent company.
The ratings also consider Eco-Bat’s significant cash balances at year-end 2015 and expected positive free cash flow in 2016, S&P said.
The ratings are supported by fair resilience of the company’s operating performance despite lower lead prices, the agency said, and expected working capital inflows.
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