Moody's lowers HydroChem outlook to stable

Moody's Investors Service said it changed the outlook of HydroChem Industrial Services, Inc. to stable from positive and affirmed other ratings.

The change in outlook was prompted by the company's proposed acquisition by Harvest Partners, LLC and the resulting increase in leverage and effect on other credit metrics, the agency said.

The proposed transaction will be financed in part through a combination of first-lien bank debt, which consists of a $50 million senior secured revolver, a $40 million term loan and a $100 million delayed term loan and, also, second-lien bank debt which comprises a delayed draw term loan of $50 million, the agency noted.

According to Moody's, HydroChem's ratings are constrained by the high proposed initial leverage, the company's relatively small size and constrained long-term revenue growth prospects as the trend toward exporting U.S. manufacturing continues and large exposure to the petrochemical and refining industry. rating constraints also include a high percentage of intangibles on the balance sheet comprising of about 69% of assets.

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