S&P cuts Hornblower

S&P said it downgraded Hornblower HoldCo LLC’s issuer rating to CCC- from CCC and its secured debt ratings to C from CCC-. The agency also revised the debt recovery rating to 6 from 5 to reflect Hornblower’s additional super-priority debt and placed the ratings on CreditWatch with negative implications.

“The downgrade reflects the company's narrowing liquidity because of negative cash flow generation and very high risk of default given its EBITDA run rate is insufficient to cover its fixed charges. Hornblower used $109 million of cash in the first nine months of 2023 to cover an operating deficit and capital expenditure (capex) of $48 million. The company funded this cash burn with intercompany loans from its unconsolidated affiliate JB Holdings, also owned by its private equity sponsor, Crestview Partners,” S&P said in a press release.

Without a cash infusion, the agency warned the company will need to restructure its capital structure within the next few months.

The negative watch reflects the revolver’s upcoming maturity in April and the elevated likelihood of a restructuring, S&P said.

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