Moody's turns Arxada outlook to stable

Moody's Investors Service changed the outlook to stable from positive and affirmed the B3 corporate family rating and B3-PD probability of default rating of Herens Midco Sarl, the parent company of Arxada AG.

Concurrently, Moody's affirmed the Caa2 rating of Herens' €460 million of senior unsecured notes and the B2 ratings of Herens HoldCo Sarl's €350 million of guaranteed senior secured notes due 2028, €750 million and $1.095 billion senior secured term loan B due 2028 and €375 million revolving credit facility due 2027.

The agency said it adjusted its base-case projections downward for the company. The change is based on the company's third quarter financial performance, “which was mildly below the agency's previous expectations,” higher than initially forecasted drawdown of the revolver, and the recently announced acquisition of Troy Corp.

“While Moody's revision to the base case expectation are relatively small, the previous positive outlook was predicated upon swift deleveraging with Moody's adjusted debt/EBITDA falling towards 7x by the end of 2022. he rating agency now expects that Arxada's Moody's adjusted leverage will fall to around 8.0x by the end of 2022 and below 7x only by year-end 2023,” the agency said in a press release.

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