Moody's revises Road Infrastructure outlook to negative

Moody's Investors Service said it revised Road Infrastructure Investment LLC's outlook to negative from stable and affirmed its B2 corporate family rating, its B2-PD probability of default rating, the B1 (LGD3) rating on its first-lien senior secured credit facilities and the Caa1 (LGD5) rating on its second-lien senior secured credit facility.

The agency said the negative outlook reflects the expectation that Road's leverage will remain elevated over the next three quarters following lower-than-anticipated operational results after increasing debt in early 2014. The increased debt funded a $149 million dividend to Road's equity owners combined with the $84 million acquisition of Eberle Design, Inc.

"Road's negative outlook reflects the elevated leverage and risk that the rating could be downgraded unless operating performance improves and costs are reduced by the end of 2015," Moody’s vice president Lori Harris said in an agency news release.

Road's B2 corporate family rating reflects its solid EBITDA margins between 12% and 15%, broad geographic manufacturing footprint and longstanding relationships with its customers, Moody’s said.

The agency said the rating is pressured by the company’s high leverage (8.9x Debt to EBITDA as of September).

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