Moody's assigns B2 to Canister facility

Moody's Investors Service said it assigned Canister International Group Inc.’s term loan and revolver B2 ratings. The agency also assigned a first-time rating of B2 to the company and a B2-PD probability of default rating.

In October 2019, an affiliate of Cerberus Capital Management, LP, which owns Canister, entered into an agreement to buy the North American and Japanese closures businesses of Reynolds Group Holdings Ltd. The proceeds of the $445 million term loan along with the sponsor's equity contribution will be used to finance the acquisition by the Cerberus affiliate.

The B2 corporate family rating mirrors the company's small scale relative to rated competitors, low organic volume growth due to concentration in carbonated beverages, high customer concentration and risks related to a transition to a stand-alone company. Canister generates most of its revenue and earnings in the mature North American market, which has faced a decline in carbonated soft drink consumption during the past decade and the agency expects this decline to continue. The company has limited exposure to international markets, where carbonated soft beverages are still growing, also constraining its organic growth potential, Moody’s said.

The outlook is stable.

Moody’s cuts Quad/Graphics, view to negative

Moody’s Investors Service said it downgraded Quad/Graphics, Inc.’s corporate family rating to B1 from Ba3, probability of default rating to B1-PD from Ba3-PD, senior secured revolver and senior secured term loan A ratings to Ba3 from Ba2 and senior unsecured notes rating to B3 from B2. Moody’s also downgraded the company’s speculative grade liquidity rating to SGL-2 from SGL-1. The outlook was changed to stable from negative.

“The downgrade reflects Quad’s declining revenue and EBITDA and increased leverage as a result of secular pressures in the commercial printing industry. “The downgrade of the SGL rating reflects Moody’s view of the company’s reduced free cash flow generating capacity,” said Peter Adu, a Moody’s vice president and senior analyst, in a press release.

Moody’s downgrades Renfro

Moody’s Investors Service said it downgraded Renfro Corp.’s corporate family rating to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD and first-lien term loan rating to Caa1 from B3.

“The downgrades reflect the increasing risk that Renfro may not be able to address its upcoming 2021 debt maturities at par in a timely and economic manner. While the company secured a covenant amendment, covenant cushion is still very modest and overall liquidity remains weak reflecting the asset-based revolving credit facility expiration in February 2021 and its senior secured term loan maturity in March 2021,” said Moody’s in a press release.

The company might not be able to handle possible interest rates hikes that may be needed for a refinancing transaction given the forecasted operating performance decline in the fiscal year ending January 2020 and uncertain future cash flow improvement amid a highly promotional apparel environment, Moody’s said.

The outlook remains negative.

S&P cuts Serta Simmons

S&P said it lowered the ratings on Serta Simmons Bedding LLC and its first-lien term loan to CCC from CCC+. The agency also cut the rating on the second-lien term loan to CC from CCC-.

“The downgrade reflects our belief that the company’s capital structure is unsustainable. We expect operating performance to remain weak in 2019 because of Mattress Firm store closures and intensified competition in the industry. Serta Simmons’ leverage increased to 14.3x for the 12 months ended Sept. 30, 2019, up from 8.6x for the same period a year ago. The company’s revenues and EBITDA dropped by double-digit percentages through the nine months ended Sept. 30, 2019, as compared with the same period in 2018,” said S&P in a press release.

Serta Simmons’ overexposure to Mattress Firm caused a significant profit decline when it closed 20% of its stores following its November 2018 reorganization. The loss of Mattress Firm, market-share losses in the regional and independent channel and lower-priced Chinese imports resulted in high-double-digit percent unit volume declines for the first nine months of 2019, S&P said.

The outlook is negative.

Moody’s upgrades Falcon Group

Moody’s Investors Service said it upgraded to Ba1 from Ba3 the corporate family and the issuer ratings of Falcon Group Holdings (Cayman) Ltd.

This rating action concludes the review for upgrade initiated on Aug. 30. Moody’s changed the outlook on Falcon to stable from rating under review.

“The upgrade of Falcon’s CFR and issuer ratings to Ba1 reflects the strengthening of Falcon’s overall credit profile as the company increasingly shifts its business mix to the provision of specialized inventory finance and receivables financing for mid and large-cap customers, characterized by higher credit quality, lower risk adjusted margins and higher recurring volumes,” said Moody’s in a press release.

Falcon began repositioning its business model in 2017. Moody’s said it believes Falcon is now less exposed to credit and operational risk and should be able to generate more sustainable and less volatile earnings going forward.

S&P puts Cleveland-Cliffs on watch

S&P said it placed all its ratings on Cleveland-Cliffs Inc. on CreditWatch with negative implications on the news of its agreement to acquire AK Steel Corp.

“Based on Dec. 2, 2019, closing prices, AK Steel shareholders will receive total consideration of approximately $1.1 billion in Cliffs stock, and will own approximately 68% of the new combined company. AK Steel shareholders will own the remaining 32%,” said S&P in a press release.

S&P revises Inmar view to negative

S&P said it revised the outlook on Inmar Inc. to negative from stable and affirmed all its ratings, including the B issuer credit rating, the B issue-level rating on the first-lien credit facilities, and the CCC+ issue-level rating on the second-lien term loan.

After January’s $415 million add-on, S&P said Inmar’s growth in revenue and margins haven’t met the agency’s expectations.

“The outlook revision reflects our expectation of weak operating performance in 2019, with pro forma S&P Global Ratings-calculated leverage at the high-7x area compared with our expectation of leverage declining to the mid-6x area at year-end 2019. Elevated leverage was a result of weaker-than-anticipated revenue growth in its core and acquired businesses and less-than-expected margin expansion. High capital expenditures and seasonal working capital outflow will also result in free operating cash flow (FOCF) deficits in 2019 compared with our previous expectation for low-single-digit FOCF to debt,” S&P said in a press release.

S&P revises Simmons Foods view to stable

S&P said it revised the outlook for Simmons Foods Inc. to stable from negative and affirmed all its ratings on the company.

“The outlook revision reflects the improved prospects for Simmons Foods’ operating performance over the next two years, which should allow the company to steadily deleverage. We now project that the company’s leverage will decline to just over 6x in fiscal year 2019 from 7.3x in 2018. We also expect the company to continue to deleverage over the next several quarters as its EBITDA expands on improved performance in its poultry segment as well as the roll off of one-time costs related to the startup of its flex plant, causing its leverage to decline below 6x by the end of fiscal year 2020,” said S&P in a press release.

The stable outlook mirrors S&P’s expectation the company will continue to improve its operating performance in 2020 while reducing its debt to EBITDA below 6x over the next year. “We believe mid-single-digit percent consolidated sales growth from better pricing and volumes in the rebounding poultry segment and improved capacity utilization in its new flex packaging plant will increase its EBITDA by at least 10% from 2019 levels and allow it to sustain EBITDA margins of about 8%, resulting in steady deleveraging,” the agency said.

S&P assigns BBB- to Ford notes

S&P said it assigned its BBB- issue-level rating to automaker Ford Motor Co.'s proposed unsecured notes. Proceeds are expected to be used for general corporate purposes.

“We expect the transaction to be roughly neutral for Ford's debt to EBITDA, which we estimate will remain under 1x over the next 12-24 months,” said S&P in a press release.

The outlook is stable.

Fitch rates Everi, notes B+, loan BB+

Fitch Ratings said it assigned first-time B+ long-term issuer default ratings to Everi Holdings Inc. and Everi Payments Inc. In addition, Fitch assigned a BB+/RR1 rating to Everi’s senior secured credit facility and a B+/RR4 rating to Everi’s senior unsecured notes.

“Everi’s rating reflects its improved credit metrics, conservative financial policy, and position as a more niche gaming supplier, albeit with an expanding portfolio of products. The ratings also reflect Everi’s business mix diversification, as EBITDA is roughly split between slots and financial technology solutions (FinTech) for its casino customers,” said Fitch in a press release.

On December 4, Everi announced an equity issuance and said it plans to use the proceeds to pay down debt. “The transaction is viewed favorably and will create additional headroom at the B+ IDR level, reducing gross debt/EBITDA by roughly half a turn. Interest savings will be roughly $10 million annually and will further strengthen FCF,” Fitch said.

The outlook is stable.

Fitch rates Ford notes BBB

Fitch Ratings said it assigned a rating of BBB to Ford Motor Co.’s proposed senior unsecured notes due 2059. Proceeds will be used for general corporate purposes. Ford's long-term issuer default Rating is BBB, and its outlook is negative.

S&P ups Viacom, off watch

S&P said it upgraded Viacom Inc. to BBB from BBB- and removed all the ratings on the company from CreditWatch, where the agency placed them with positive implications on Aug. 14.

Viacom and CBS Corp. completed their merger Dec., 4.

“Concurrent with the closing, Viacom Inc. will cease to exist and ViacomCBS will assume all of the company's rights and obligations under its outstanding senior notes and junior subordinated debentures and indenture,” said S&P in a press release.

DBRS ups Allied Properties notes

DBRS said it upgraded its rating on Allied Properties Real Estate Investment Trust’s senior unsecured debentures to BBB from BBB (low) and maintained the positive trend.

The rating upgrade largely mirrors Allied’s transition to a mostly unsecured debt capital structure with a secured debt-to-total debt ratio comfortably below 40% on a sustained basis as the trust aims to fund maturing mortgages and, in some cases, prepay mortgages with unsecured debt, DBRS said.

The trust’s growing portfolio of quality unencumbered assets is valued at about C$5.2 billion, which provides coverage of about 3 times (x) on unsecured debt, including undrawn capacity on unsecured credit facilities, the agency said.

S&P rates AXIS notes BBB

S&P said it assigned its BBB issue rating to AXIS Capital Holdings Ltd.'s $425 million 4.9% fixed-rate reset junior subordinated notes due 2040. The agency expects the notes to get tier 2 capital treatment under the Bermuda Monetary Authority's capital requirement rules.

The company intends to use the proceeds to repay its 5.875% senior notes due 2020 and redeem all its 5.50% series D preferred shares.

These junior subordinated notes are being sold by AXIS Specialty Finance LLC, a finance subsidiary and are fully guaranteed on a junior subordinated basis by the holding company AXIS Capital.

“Our issue-level rating is two notches below our long-term issuer credit rating on AXIS Capital. This reflects the contractual subordination and deferability of interest payment on these notes. In addition, these notes are subordinated to policyholders' obligations and all existing and future unsecured senior debt of AXIS Capital and rank pari passu to all future unsecured and junior subordinated debt of AXIS Capital,” said S&P in a press release.

S&P assigns BBB+ to Broadridge notes

S&P said it assigned its BBB+ issue-level rating to Broadridge Financial Solutions Inc.’s proposed $750 million senior unsecured notes.

Broadridge expects to use proceeds primarily to repay borrowings on its revolving credit facility and for general corporate purposes.

“S&P Global Ratings’ stable outlook on Broadridge reflects our expectation for consistent and solid operating performance over the next 12 to 24 months with annual revenue growth in the low-single-digit percentage area and adjusted EBITDA margins of about 20%. We expect the company will continue to pursue its growth and shareholder return goals while maintaining adjusted leverage below 2x,” said S&P in a press release.

Fitch gives Broadridge notes BBB+

Fitch Ratings said it assigned a BBB+ rating to Broadridge Financial Solutions, Inc.’s planned offering of $750 million of senior unsecured notes. Broadridge’s long-term issuer default rating is BBB+. The notes will be will rank equally with other unsecured senior debt.

Proceeds will be used to refinance a portion of the debt on the revolver ($873 million outstanding as of September 2019), while any remaining proceeds will likely be used for general corporate purposes. Fitch said it estimates the transaction could increase leverage modestly by 0.1x and gross debt will increase modestly to $1.9 billion from about $1.8 billion at September.

S&P cuts Genting, off watch

S&P said it lowered its long-term issuer credit rating on Genting Bhd. to BBB+ from A- and also lowered the long-term issuer credit rating on subsidiary Resorts World Las Vegas LLC as well as the long-term issue ratings on the company’s senior secured debt and $1 billion senior unsecured notes to BBB from BBB+.

S&P downgraded Genting because it expects the company’s leverage and cash flow adequacy to weaken over the next 12-18 months, given its more aggressive expansion plans. The agency also believes the company’s risk appetite has increased. In the past year, Genting acquired 49% of Empire Resorts Inc. and privatized the company at a time of ongoing expansion at subsidiaries Genting Singapore (GenS) and Resorts World. “This has materially increased the group’s leverage and weakened its credit quality,” said S&P in a press release.

Genting goal to integrate the newly-acquired Empire with its other operations in the U.S. will help establish its Resorts World brand in the North American market. The group plans to restructure the debt at Empire and is currently negotiating with banks. However, S&P said it thinks this restructuring may not reduce Empire’s total debt, keeping it at $640 million to $670 million over 2019-2020

The agency removed all the ratings from CreditWatch, where they were placed with negative implications on Aug. 15.

The outlook is stable.

© 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.