Moody's assigns Atlas Ontario B2

Moody's Investors Service said it assigned a B2 corporate family rating and a probability of default rating of B2-PD to Atlas Ontario LP (Allied Universal). Concurrently the agency affirmed the ratings of Allied Universal Holdco LLC's senior secured instruments of B2 and the senior unsecured instruments of Caa1.

Moody's also withdrew Allied Universal Holdco LLC's B2 CFR and B2-PD PDR ratings. The outlook has been changed to negative.

“The rating actions follow a review of the credit taking into account recent performance of the company. Leverage is very high for the rating at 8.5x as of the end of 1Q 2022 and cash flow is expected to be negative this year due to certain non-recurring expenses. Leverage has been increasing sequentially in an environment of rising interest rates and pressured margins. Combined with a highly acquisitive business strategy Moody's sees elevated risks to the financial profile of the company,” the agency said in a press release.

The negative outlook includes a forecast for low single-digit revenue increases, but margins will continue to be pressured, and EBITDA margins will be between 7% and 9%, which is under historical levels, Moody’s said.

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