Moody's snips Augusta Sportswear

Moody's Investors Service said it downgraded Oak Parent, Inc.'s (Augusta Sportswear Group) corporate family rating to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD, and senior secured credit facilities ratings to Caa1 from B3.

The downgrade reflects Moody's view that Augusta's revolver borrowings are likely to remain high in the near term given the less certain consumer environment and supply chain volatility. In October 2022, the company drew a substantial amount on its revolver to pay for fees and expenses for its credit facility extension. While Moody's initially expected revolver borrowings to be quickly paid down leading to adequate liquidity, current conditions are likely to require greater liquidity to support working capital. As a result, Moody's now projects weak liquidity over the next 12-18 months, reflecting limited excess revolver availability in peak seasonal borrowing periods.

“Nevertheless, Moody's expects modestly positive full-year 2023 cash flow, benefiting from gradual inventory reduction during the year and assuming the receipt of insurance claim proceeds for the 2022 Mexico facility fire. The company should have an adequate cushion under the springing total leverage covenant, which Moody's expects to be tested, and has no debt maturities until April 2025,” the agency said in a press release.

The outlook remains stable.

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