Moody’s drops Transtar, loans

Moody's Investors Service said it downgraded Transtar Holding Co.’s corporate family rating to B3 from B2, probability of default rating to B3-PD from B2-PD and the ratings of its first- and second-lien credit facilities to B2 and Caa2, respectively.

The outlook is negative.

Moody’s said the downgrade to B3 corporate family rating reflects Transtar's weaker-than-expected operating performance and the risk that the company may not be able to grow its profitability meaningfully over the next 12 to 18 months, leading to sustained weak credit metrics, including debt leverage of about 6.7 times (Moody's adjusted) as of June 30.

Earnings have remained weak in fiscal 2014 and in the first half of 2015 driven by lower sales volume and challenges associated with ETX integration.

Moody's believes that despite overall growth in the industry, poor execution and lack of operating discipline under the prior management team contributed to the company's underperformance over the last two years.

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