Moody's lowers Lakeland Tours

Moody's Investors Service said it lowered its ratings for Lakeland Tours, LLC (WorldStrides), including the company's corporate family rating to Caa3 from B2 and probability of default rating to Caa3-PD from B2-PD and the ratings for its senior secured first-lien bank credit facilities to Caa2 from B1. The outlook remains negative.

"The downgrades reflect significant disruption caused by the Covid-19 coronavirus crisis, which will impose meaningful liquidity stress on the company's business," said Shirley Singh, Moody's lead analyst for Worldstrides, in a press release.

Moody's expects a significant increase in trip cancellations to prompt a big cash drain as deposits already received are refunded. "Liquidity will quickly weaken and WorldStrides' very high leverage in excess of 9x increases the risk of default, whether pre-emptively via a distressed exchange of debt or otherwise," added Singh.

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