Moody’s shifts EG Group view to negative

Moody’s Investors Service said it changed the outlook to negative from stable for EG Group Ltd. At the same time, Moody’s affirmed the B2 corporate family rating, B2-PD probability of default rating of the company and B2 and Caa1 first- and second-lien instrument ratings of the debt issued by its subsidiaries EG Finco Ltd., EG Global Finance plc., EG America LLC and EG Group Australia Pty Ltd.

The negative outlook reflects the increased risk the company’s performance could remain above 6.5x over the next 6-12 months, with only adequate liquidity.

Last month, EG reported a conditional offer to acquire Caltex for A$3.9 billion. Although EG’s recent acquisitions have been funded with a view of maintaining pro forma leverage within the ranges required for the B2 rating, Moody’s said it remains concerned about the company’s ability to control its rapidly expanding operations across three continents and different operational formats.

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