Moody's lowers ERC Finance view to negative

Moody's Investors Service said it changed the outlook on ERC Finance, LLC, the parent company of Eating Recovery Center, LLC to negative from stable.

Moody's also said it affirmed the company's B3 corporate family rating and B3-PD probability of default rating, along with the B2 senior secured first-lien bank debt and credit facility ratings.

The agency also assigned a B2 (LGD 3) rating to the proposed senior secured first-lien delayed draw term loan.

The negative outlook reflects an expectation for ERC's cash flow profile to remain more constrained than initially contemplated, driven by material investments into its corporate infrastructure and marketing team, Moody's said.

The negative view also considers the elevated level of cash flow deployed into organic expansion, the agency said.

Moody's said it expects financial leverage to remain very high, rather than decline as originally expected.

The ratings reflect the company's continued very high financial leverage with pro forma adjusted debt-to-EBITDA of 8.5x for the 12 months that ended Dec. 31, 2018, the agency said.

The credit profile also is constrained by the company's small absolute size and concentrated service line offering, Moody's said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.