Moody's moves McLaren trends to negative

Moody's Investors Service said it changed the outlook to negative from stable and affirmed McLaren Holdings Ltd.'s Caa1 corporate family rating and its Caa1-PD probability of default rating. Concurrently, the agency affirmed the Caa1 instrument rating to the $620 million guaranteed senior secured notes due 2026, issued by McLaren Finance plc.

“The outlook change to negative reflects McLaren's very weak Q3 2022 results and heightened uncertainty about the company's ability to achieve an operational turnaround in the next 12-18 months. The negative outlook also reflects Moody's concerns about McLaren's weak liquidity despite additional funding received from its shareholders,” the agency said in a press release.

Moody’s noted it had forecasted McLaren to sell slightly more than 1,000 units; however, it only sold 545 units.

“McLaren cited industry-wide semiconductor shortages and ongoing supply constraints as the key drivers for the low production volume. Low production volumes resulted in a company-reported EBITDA loss of £54 million for the first nine months of 2022. McLaren's cash balance reduced to £47 million at the end of September 2022 compared with £77 million at the end of 2021 despite an equity injection in Q3 2022 of $125 million,” Moody’s said.

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