Moody’s cuts Alpha Bidco loan

Moody’s Investors Service said it downgraded Alpha AB Bidco BV’s €830 million guaranteed senior secured first-lien term loan B, which will include an expected add-on of €100 million incremental term loan B, and the €150 million existing guaranteed senior secured first-lien revolving credit facility to B3 from B2. The downgrade of the senior secured ratings to B3 reflects the change in the mix of debt as well as the weak security package and guarantor coverage. The outlook is stable.

The rating action follows the announcement Alpha AB, or Ammega, will issue an expected add-on of €100 million to its senior secured first-lien term loan B facility, with the proceeds used to repay €100 million of revolver drawings. At the same time, the company acquired Midwest Industrial Rubber, Inc. The acquisition was completed on Jan. 22 and was 100% equity funded.

The affirmation reflects Ammega’s enhanced business profile following the acquisition of Midwest Industrial and Moody’s expectation the company will be able to delever towards 7x in the next 12-18 months through its ongoing cost-saving initiatives. However, due to the highly leveraged capital structure, the company remains weakly positioned in the rating category and any deviation from the business plan could increase the negative pressure on the ratings, Moody’s said.

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