Moody's downgrades Iracore

Moody's Investors Service said it downgraded Iracore International Holdings, Inc.'s corporate family rating to Caa2 from Caa1, probability of default rating to Caa2-PD from Caa1-PD, senior secured rating to Caa2 from Caa1 and speculative grade liquidity to SGL-4 from SGL-3. The outlook remains negative.

The rating action reflects Moody's expectation that Iracore's operating results will remain very weak through at least 2016 due to the low oil price and related restrained capital spending by its main customers in the Canadian oil sands.

The agency said Iracore's Caa2 corporate family rating is driven by the company's very high financial leverage (in excess of 10x) and weak liquidity. Iracore's pipe-lining system has historically been sold mainly to a few large Canadian oil sands customers for use in critical applications, but demand from these customers has weakened materially and is likely to weaken further in Moody's opinion in response to the continuing low price of oil and as they seek alternatives to the Iracore system for their near-term needs.

The negative outlook reflects the elevated risk that the company may not have sufficient liquidity to meet its obligations, Moody’s said.

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