Moody’s alters Denali view to negative

Moody’s Ratings said it changed its outlook for Dispatch Acquisition Holdings, LLC (Denali Water Solutions) to negative from stable and affirmed the B3 ratings on the company and its senior secured first-lien bank credit facility.

“The outlook change to negative reflects Denali's underperformance relative to Moody's expectations, driven by weaker commodity prices affecting the converted products segment, mainly the Imperial Western Products ("IWP") business, and by project delays in the downstream industrial business. The company has recently divested of these downstream operations.

“While Moody's expects credit metrics to improve, a material improvement is unlikely in the near term as uncertain macroeconomic conditions and commodity headwinds will continue to weigh on earnings growth and cash flow for some time. Moody's expects these factors to sustain high leverage (currently around 8x) and weigh on the timing to derive the benefits from the 2022 IWP acquisition, which have been slow to materialize,” the agency said in a press release.

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