Moody’s: Explorer Holdings view to negative

Moody's Investors Service said it changed Explorer Holdings, Inc.'s (ERT) outlook to negative from stable following the company's stated plans to fund a sizable acquisition with debt.

However, the agency concurrently affirmed the company’s B2 corporate family rating, B2-PD probability of default rating and the B1 rating on the first-lien credit facilities (revolver and term loan).

The complementary acquisition will be funded with the proposed issuance of an incremental $210 million first-lien senior secured term loan and incremental $30 million second-lien secured notes. A portion of the proceeds (net of transaction related fees and expenses) will also be used to repay all borrowings outstanding ($32 million) under the revolver.

"The change in ERT's outlook to negative is driven by the delay in reducing leverage and improving its free cash flow generation profile due to the company's aggressive approach to growth via debt-funded acquisitions," Prateek Reddy, Moody's lead analyst for the company, said in a news release.

"The rating is supported by the company's improved scale, moderated customer concentration risk, and strengthened competitive position within some of its service offerings."

© 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.