Moody's lowers Casa

Moody's Investors Service said it downgraded Casa Systems, Inc.'s ratings, including the corporate family rating to Caa1 from B3, the probability of default rating to Caa1-PD from B3-PD and the senior secured term loan due 2023 to Caa1 from B3. Reflecting Casa’s weak liquidity, Moody's lowered the speculative grade liquidity rating to SGL-4 from SGL-2.

“The downgrade of the ratings reflects Moody's concern that Casa will be unable to refinance the term loan prior to maturity (Dec. 20, 2023) on commercially viable terms due to the challenging refinancing market for leverage loans and Casa's weak operating metrics and deteriorated liquidity. Given the unsustainable debt capital structure, there is an elevated risk that Casa will either purchase the remaining term loan at a large discount to principal or exchange the term loan for a reduced financial obligation over the next year. Moody's would likely view either transaction as a distressed exchange, which Moody's treats as a default,” the agency said in a press release.

The agency noted Casa paid $39 million in cash for $41.7 million of the term loan’s principal on Nov. 2. Case also hired an investment banking firm to explore alternate funding sources.

The outlook is negative.

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