Moody’s cuts EnerSys, view to stable

Moody’s Investors Service said it downgraded the ratings of EnerSys, including the company’s corporate family rating to Ba2 from Ba1, probability of default rating to Ba2-PD from Ba1-PD, and its senior unsecured notes rating to Ba3 from Ba2.

The SGL-1 speculative grade liquidity rating is unchanged.

“EnerSys ratings reflect an elevated level of risk associated with company’s recently increased appetite for acquisitions and the associated higher financial leverage relative to the last few years. Moody’s estimates approximately a 3.4 times debt-to-EBITDA for the twelve months ended September 29, 2019 (all ratios are Moody’s-adjusted unless otherwise stated), pro forma for a full year of operations from the December 2018 acquisition Alpha Technologies Services, Inc. (Alpha) and the September 2019 acquisition N Holding AB (NorthStar), which closed one day subsequent to quarter end. Moody’s does not expect EnerSys to make any sizeable acquisitions in the near term, but the company’s business model is evolving toward growth and there is increased risk for sizeable and potentially debt-funded acquisitions over time,” the agency said in a press release.

Moody’s revised the outlook to stable from negative.

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