Moody's downgrades Dodge Construction

Moody's Ratings (Moody's) downgraded Dodge Construction Network LLC's backed senior secured first-lien bank credit facilities to Caa1 from B2 and backed senior secured second-lien term loan to Ca from Caa2. The agency also lowered the corporate family rating to Caa2 from B3 and the probability of default rating to Caa2-PD from B3-PD.

“The downgrade reflects Moody's expectation that DCN's operating performance will continue to be pressured further eroding the company's liquidity position over the next 12 months. Over the past year, DCN has experienced a material decrease in customer retention for its Blue Book business segment and delays in invoicing and cash collections, which has pressured profitability and weakened its liquidity profile.

“As such, Moody's views DCN's capital structure as unsustainable with an LTM debt/EBITDA (inclusive of Moody's adjustments) in excess of 7.5x for the LTM period ended Dec. 31, 2023. Moody's believes that the company has limited financial flexibility to execute a meaningful operational turnaround driven by subpar operating performance, executional challenges, and weak liquidity,” the agency said in a press release.

The outlook is maintained at negative.

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