Fitch slices Enviva

Fitch Ratings said it downgraded Enviva Inc.'s long-term issuer default rating to CCC- from B+ and its senior unsecured rating to CC/RR5 from B+/RR4. The agency placed the ratings on rating watch negative.

“The downgrade of the IDR to CCC- reflects a significant and material decline in earnings and cashflows versus prior expectations and a substantial increase in the possibility of default. Enviva has disclosed there is substantial doubt about its ability to continue as a going concern. The downgrade of the senior unsecured notes to CC/RR5 reflects anticipated creditor recoveries based on a going concern value which assumes wood pellet prices normalize to mid-cycle levels,” Fitch said in a press release.

The agency warned that without “an unexpected and significant improvement in wood pellet prices,” injection of cash or renegotiation of contracts, it is likely that Enviva will breach its secured credit facility covenants as soon as Dec. 31.

© 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.