Moody’s rates Anchor loan Caa1

Moody’s Investors Service said it assigned a Caa1 rating to Anchor Glass Container Corp.’s new $60 million first-line senior secured term loan due 2023. Moody’s also downgraded the rating on the company’s first-lien senior secured term loan due 2023 to Caa1 from B3 and the second-lien senior secured term loans due 2024 to Caa3 from Caa2.

On Friday, Anchor completed a debt exchange, which Moody’s said it considers distressed. Moody’s lowered its corporate family rating to Caa1 and probability of default rating to Caa1-PD from B3 and B3-PD, respectively. The agency also added an LD, or limited default, designation to the probability of default rating, which will be removed after three business days.

“The downgrade of the CFR to Caa1 reflects Anchor’s lack of progress in replacing the sales from the loss of a major customer, an expectation of slightly negative free cash flow and a lack of cushion under the financial covenant for the revolver. Moody’s expects leverage to remain high at approximately 6.75x and free cash flow to debt to be -1% by the end of 2021 (pro forma for the debt exchange).

The outlook remains negative.

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