Moody’s eyes Circor for downgrade

Moody's Investors Service said it placed Circor International, Inc.’s ratings on review for downgrade, including the B3 corporate family rating, the B3 -PD probability of default rating and the B2 senior secured debt rating. The outlook was also changed to ratings under review from stable. The SGL-3 speculative grade liquidity rating remains unchanged.

“The rating action follows Circor's announcement that its fiscal 2021 Form 10-K filing with the Securities and Exchange (SEC) will be delayed due to the emergence of accounting irregularities related to one of its business units, and financial statements issued after fiscal 2017 should not be relied upon. As part of the announcement, the company is also exploring strategic alternatives for a potential transaction such as a merger or divestiture with interested parties to maximize shareholder value,” Moody’s said in a press release.

The review indicates increased governance risk concerning the company's compliance, controls and reporting functions and the uncertainty around forward-view estimates, Moody’s said.

“Circor estimates the accounting irregularities will have a cumulative effect on pre-tax income in the range of $35 million-$45 million over at least five years, but this is subject to change. Moody's also believes the likelihood that a strategic transaction could potentially favor shareholders over creditors,” the agency said.

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