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Moody’s assigns B1 to Doosan Bobcat
Moody's Investors Service said it assigned a B1 corporate family rating to Doosan Bobcat Inc. (DBI).
The outlook is stable.
At the same time, the agency withdrew the B1 corporate family rating of Doosan Bobcat’s subsidiary, Doosan Infracore International, Inc., because Doosan Infracore’s merger with its 100% owned subsidiary, Clark Equipment Co. (unrated) was completed on June 30 with Clark Equipment as the surviving entity.
Moody's also affirmed the Ba3 rating on the $1.06 billion senior secured term loan co-borrowed by Doosan Infracore and Doosan Holdings Europe Ltd. (unrated). Doosan Infracore’s obligation was assumed by Clark Equipment following the completion of the merger process.
Clark Equipment and Doosan Holdings Europe are co-borrowers on a joint and several basis for the senior secured term loan. Accordingly, the rating on the senior secured term loan is based on the credit quality of their parent Doosan Bobcat, which broadly reflects in turn the combined financials of the co-borrowers, the agency said.
"DBI's B1 CFR primarily reflects its dominant position in the compact farm and construction equipment market in North America, as well as its good ability to generate positive free cash flow over the next 1-2 years," Moody's vice president and senior analyst Wan Hee Yoo said in a news release.
"However, the CFR is constrained by the company's moderate scale, high product concentration and the highly cyclical nature of the compact farm and construction equipment industry."
The agency expects that Doosan Bobcat’s adjusted debt/EBITDA will improve to about 3.3 times to 3.5 times over the next 12 to 18 months from 4 times in 2015, mainly driven by debt redemptions that occurred in the first half of 2016, as well as the company's moderate growth in earnings.
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