Moody's lowers Sector Alarm

Moody's Investors Service said it downgraded Sector Alarm Holding AS’ corporate family rating to B3 from B2, its probability of default rating to B3-PD from B2-PD, the senior secured bank credit facilities to B3 from B2 and changed the outlook to stable from negative.

“Moody's downgraded the ratings because higher cancelation rates and significantly higher investments for both new customer acquisition and other capital expenditure has led to materially weaker operating performance, credit metrics and liquidity alongside negative free cash flow generation (FCF),” the agency said in a press release.

The agency noted that Sector Alarm’s EBITDA for the first quarter of 2023 dropped to NOK 170 million, from NOK 230 million in the first quarter of 2022, which was complicated by the weakening of the Norwegian kroner against the euro.

“The combined impact of these developments is that Sector Alarm's Moody's-adjusted leverage for the last 12 months (LTM) to March 31, 2023 stood at 11.5x. The rating agency expects leverage to remain similarly elevated throughout 2023 before a gradual improvement to around the 8x level in 2024 and the 6.5x level in 2025 driven by EBITDA growth,” Moody’s said.

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