S&P slashes Fujian Yango Group

S&P said it cut its ratings on Fujian Yango Group Co. Ltd. to CCC- from B and on its senior unsecured notes CC from B-. The agency cited the planned debt restructuring at the issuer’s unrated subsidiary Yango Group Co. Ltd. The outlook is negative.

“Fujian Yango's nonpayment risk has severely increased following its listed subsidiary, Yango Group's proposed offer to exchange $747 million of its senior notes into new notes due in September 2022. Although we don't rate Yango Group, the exchange offer is likely to be a de-facto distressed debt restructuring, given the company's announcement on Nov. 1, 2021, said that the exchange is intended to improve liquidity and avoid payment default,” S&P said in a press release.

The agency said Fujian Yango will need to rely more on other resources to handle its own debt maturities, including $310 million of offshore notes and RMB 3.4 billion onshore public bonds due before Oct. 2022.

S&P said it subsequently withdrew its ratings on Fujian Yango at the company’s request.

Moody's cuts Aruba Investments, assigns notes Caa2

Moody's Investors Service said it trimmed Aruba Investments Holdings, LLC's (Angus Chemical Co.) corporate family rating to B3 from B2, probability of default rating B3-PD from B2-PD and first-lien credit facilities to B2 from B1. The second lien term loan is affirmed at Caa1. The outlook changed to stable from negative. Moody's also assigned a Caa2 rating to the planned $200 million of senior PIK toggle notes due 2026 to be issued by Kobe US Midco 2, Inc.

"The downgrade is a result of a more aggressive financial policy than previously expected and reflects the increased leverage related to the proposed debt-financed dividend which follows a dividend in 2020 and subsequent acquisition that had already pressured the rating," said Domenick R. Fumai, a Moody’s vice president and lead analyst for Aruba Investments, in a press release.

The Caa2 rating for the planned notes, two notches below the B3 CFR, reflects the holding company debt is structurally and contractually subordinated to Aruba Investments’ debt, the agency said.

The outlook reflects the view that Angus’ operating performance will continue performing well, including adding revenue and growing EBITDA, Moody’s said.

Moody's ups Spectacle Gary, rates loan B3

Moody's Investors Service said it upgraded Spectacle Gary Holdings, LLC's corporate family rating to B3 from Caa1 and probability of default rating to B3-PD from Caa1-PD. The agency also gave Spectacle’s planned $415 million seven-year term loan B, and a Ba3 rating to its proposed $35 million five-year priority revolver.

“The upgrade of Spectacle's CFR considers the company's favorable ramp-up to date and expectation that the company will achieve debt to EBITDA in its first full year of operation in the range of 4x to 4.5x. The upgrade also considers that in addition to extending Spectacle's debt maturity profile, the proposed financing will materially decrease annual interest expense by eliminating the 15% subordinated PIK debt that exists in the current capital structure. As a result, pro forma annual interest coverage (defined as EBITDA/Interest) more than doubles, to about 4.5x from about 2x,” Moody’s said in a press release.

Proceeds from the offering, which includes a $10 million draw on the revolver and $43 million of balance sheet cash, will be used to refinance all of Spectacle's debt, including a $370 million term loan due 2025, a $10 million revolver expiring 2024 and a 15% subordinated PIK note due 2026.

The outlook is stable.

S&P gives Spectacle Gary loans BB-, B

S&P said it gave Spectacle Gary Holdings LLC’s planned $35 million revolver and $415 million term loan, BB- and 1 recovery ratings and B and 3 recovery ratings, respectively, to help refinance its debt. The company plans to rename itself HRNI Holdings LLC for Hard Rock Northern Indiana.

“The proposed refinancing should accelerate debt repayment, improving Spectacle's cushion to withstand a moderate potential EBITDA decline from new competition and maintain adjusted leverage under 5x. Although the proposed financing transaction is largely debt for debt, we view it as a credit positive since we expect it to accelerate debt reduction over time,” S&P said in a press release.

The agency also revised the company’s outlook to positive from stable and affirmed the B issuer rating, citing the benefits of the refinancing.

Fitch assigns HRNI, B, loan B+

Fitch Ratings said it assigned HRNI Holdings, LLC, formerly Spectacle Gary Holdings, LLC, an expected B long-term issuer default rating and gave expected B+/RR3 ratings to HRNI's announced $415 million senior secured term loan B.

“HRNI's IDR reflects its b- stand-alone credit profile (SCP) with a one-notch uplift related to its relationship with Seminole Hard Rock Entertainment, Inc. (BBB-/stable) and Seminole Hard Rock International, LLC (BBB-/stable); collectively SHRE,” Fitch said in a press release.

Fitch said it estimates a pro forma gross leverage (total debt/EBITDA) of 4.4x, which should decline towards 4x by 2022. “This is strong in the context of the SCP, but will increase in the medium-term due to cannibalization from competitive openings in the Chicagoland market.”

The outlook is stable.

S&P ups Cleveland-Cliffs

S&P said it boosted Cleveland-Cliffs Inc.’s issuer rating to B+ from B, its senior secured debt to BB from BB-, the guaranteed unsecured debt to B from CCC+ and the nonguaranteed subordinated debt to B- from CCC+. The recovery rating on the secured debt remains 1; however, the agency revised the guaranteed unsecured debt’s recovery rating to 5 from 6. The recovery rating on the nonguaranteed subordinated debt remains 6.

“We expect that cash flow generation will be applied toward debt repayment, thus improving credit quality and strengthening the cushion against a downturn. We project Cliffs will generate adjusted EBITDA of $5.5 billion-$5.7 billion for fiscal year 2021, driven by higher shipments and price realizations. We assume Cliffs will benefit from its competitive position as the largest steel supplier to the U.S. auto industry,” S&P said in a press release.

The agency said it forecasts Cliff’s 2022 EBITDA could increase to $6 billion-$6.5 billion when the old auto contracts roll off and the higher-priced resets take a full effect, partially offset by S&P’s forecast of about 30% lower hot rolled coil steel spot prices.

The outlook is positive.

S&P rates Kobe notes CCC

S&P said it gave CCC and 6 recovery ratings to Kobe US Midco 2 Inc.'s newly planned senior payment-in-kind toggle notes.

Aruba Investments Holdings LLC (Angus Chemical Co.) is adding $100 million to its U.S. dollar term loan B due November 2027. It is also issuing new $200 million of senior toggle notes through a holding company (HoldCo), Kobe US Midco 2 Inc. The company will use both the term loan B add-on and PIK toggle note proceeds to pay a $300 million dividend to shareholders.

Concurrently, S&P affirmed Aruba’s B- issuer rating.

The outlook is stable.

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