Moody's eyes MVK for downgrade

Moody's Investors Service said it placed MVK Intermediate Holdings, LLC's B3 corporate family rating, B3-PD probability of default rating and the B3 rating on the company's senior secured first-lien revolving credit facility and $335 million first-lien secured term loan under review for downgrade.

“The action is based on Moody's view that the company will be challenged to reduce very high leverage and generate meaningful free cash flow in the next 12 to 18 months,” the agency said in a press release.

As of June 30, MVK's Moody's adjusted debt/EBITDA was above 10x, which is higher than the agency’s downgrade factor of debt/EBITDA sustained above 7x, and LTM free cash flow is negative, Moody’s noted.

Moody's said it will assess MVK's earnings performance for the rest of 2021 and the revenue, earnings and cash flow prospects for 2022.

“Moody's will also evaluate the company's liquidity position including the capacity to fund the normal off season cash needs that have ranged from $70 million-$100 million in recent years,” the agency said.

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