Moody’s cuts Imperial Metals

Moody’s Investors Service downgraded Imperial Metals Corp.’s corporate family rating to Caa2 from Caa1, probability of default rating to Caa2-PD from Caa1-PD and senior unsecured rating to Caa3 from Caa2. The speculative liquidity rating was lowered to SGL-4 from SGL-3. The outlook was cut to negative from positive.

Moody’s said the action reflects Imperial’s announcement that production will not meet its guidance and that the company will breach bank covenants, require additional financing and review strategic alternatives.

Imperial’s capital structure is likely untenable, Moody’s said, with LTM adjusted debt/EBITDA around 12x, nearly all of its C$800 million of debt due in less than two years, its assertion it will not meet its bank covenants, continuing negative free cash flow and a lack of liquidity, and the company’s announcement that it is considering strategic alternatives.

Though the Red Chris mine has been in commercial production since July 2015 and the Mount Polley mine resumed normal operations in June 2016 following its tailing dam breach, copper production at both sites has been lower than guidance and Imperial is in the process of revising mine plans at each operation.

Moody’s confirms AMC, upgrades Carmike notes

Moody’s Investors Service confirmed AMC Entertainment Holdings, Inc.’s existing senior secured term loan at Ba1, confirmed its senior subordinated notes at B2 and upgraded the $230 million of senior secured notes of Carmike Cinemas, Inc. to Ba1 from B1.

Moody’s assigned a B1 corporate family rating, B1-PD probability of default and SGL-2 speculative grade liquidity rating to AMC Entertainment Holdings, Inc. reflecting the merger of AMC Entertainment Inc. into AMC Entertainment Holdings. The outlook is stable.

The confirmation ends a review for downgrade initiated when the company announced an agreement to acquire Nordic Cinema Group coupled with earlier transactions including Odeon & UCI and Carmike.

The Carmike notes are guaranteed by AMC and now benefit from lift provided by substantially more subordinated debt in AMC’s capital structure.

Moody’s said the B1 rating incorporates high leverage that, although expected to improve, is currently above its tolerance for the level, weakly positioning the company in the rating category.

The rating agency projects that leverage, following the recent acquisitions of Carmike, Odeon and Nordic, will approach 5x at the end of 2018, improving from approximately 5.7x pro forma as of March 31, with growth in EBITDA and mandatory term loan amortization.

Despite these challenges, the company is the largest operator in the world, with operations that extend into Europe and the Nordics which contribute over 30% of pro forma revenues. The diversity helps spread geographic risks, thus reducing the direct impact of negative trends in a particular region.

Moody’s upgrades Fresenius

Moody’s Investors Service upgraded the long-term issuer rating of Fresenius Medical Care Holdings, Inc. to Baa3 from Ba2. Fresenius Medical Care is the holding company consolidating all U.S. operations of Fresenius Medical Care AG & Co. KGaA, which is rated Baa3. The outlook is stable.

The action ends a review begun on May 11.

Moody’s said the upgrade reflects the company’s standalone credit profile but also the fact that it is a material subsidiary of Fresenius Medical Care, generating around 70% of consolidated sales and EBITDA.

In addition, Moody’s expects that Fresenius Medical Care AG and Fresenius Medical Care Holdings will move to a wholly unsecured capital structure over time thereby reducing the structural subordination.

Fresenius Medical Care Holdings’ standalone operating profitability and credit metrics are relatively similar to those of its parent company, Moody’s said. Margin pressure in the U.S. dialysis business and strong growth of its margin-dilutive care coordination are mitigated by improvements in payor mix and costs.

In addition, Fresenius Medical Care Holdings has a very strong cash conversion and cash flow generation broadly in line with its parent.

Moody’s rates SoftBank notes Ba3

Moody’s Japan KK assigned a Ba3 subordinated debt rating to the proposed undated subordinated resettable notes in two tranches to be issued by SoftBank Group Corp.

The rating is two notches below the Ba1 Corporate Family Rating because of their deeply subordinated status and characteristics which are similar to preferred stock.

But Moody’s said it would treat the notes as 100% debt in calculating the company’s adjusted financial metrics.

The stable rating outlook reflects Moody’s view that the company will maintain significant financial flexibility to offset its already high leverage.

Moody’s less likely to upgrade HCA notes, loans

Moody’s Investors Service said it was less likely to upgrade the senior secured notes and credit facilities of HCA Inc. from their current level of Ba1 after the company amended and extended its asset-based revolving credit facility.

Absent any further changes to the capital structure, there is reduced likelihood that the senior secured debt (including notes and credit facilities) would be upgraded to investment grade if Moody’s upgrades HCA’s Corporate Family Rating to Ba1, the agency said. This is due to changes in the HCA’s capital structure and attributes of Moody’s Loss Given Default Methodology.

© 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.