Moody’s cuts FTE Verwaltungs

Moody's Investors Service said it downgraded FTE Verwaltungs GmbH’s corporate family rating to B2 from B1 and probability of default rating to B2-PD from B1-PD.

The rating assigned to the company's €263.3 million senior secured notes was downgraded to B2 from B1 and the rating on its €42.5 million super senior revolving credit facility was downgraded to Ba2 from Ba1.

The outlooks are stable.

With the rating already weakly positioned after the distribution of an extra dividend used to repay part of a shareholder loan outside of the restricted group, financed by a €23.3 million tap issue in November 2013, Moody’ said the action was triggered by (a) a 3.7% year-on-year revenue decline during the first six months of 2014 against a mid-to-high single digit organic growth reported by other suppliers to the automotive industry; (b) a 3.1% decline in EBITDA (adjusted by FTE for one-time effects); (c) a material negative free cash flow; (d) all of that leading to a leverage ratio well above the 5 times debt/EBITDA maximum level set for the B1 rating category; and (e) Moody's expectation that FTE will therefore be quite challenged to meet the triggers set to maintain a B1 corporate family rating in the near future.

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