S&P slices Obra

S&P said it lowered its ratings for Obra Capital Inc. to CCC from CCC+ and its secured term loan to CCC- from CCC+ and revised the recovery rating to 5 from 4, indicating modest (10%-30%; rounded estimate: 25%) recovery in default.

“The downgrade reflects our view that Obra's liquidity position will be strained for the next six to 12 months, and the risk of its failure to cover the sizable principal amortization and interest payment has increased,” S&P said in a press release.

As of June 30, the company's cash balance was $7.3 million, dropped from $23.2 million as of March 31. Other liquidity sources include about $5 million available capacity on its revolver and potential partial collections of the $7.9 million accounts payable.

Obra's liquidity uses in the next 12 months include about $5.2 million of mandatory quarterly term loan amortization and about $2.3 million monthly interest payment on its debt.

The outlook is negative.

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