Fitch downgrades Emeco

Fitch Ratings said it downgraded Emeco Holdings Ltd.'s (Emeco) long-term issuer default rating to CC from B-.

The agency also said it downgraded the rating on the company’s $282 million 9 7/8% senior secured notes due in 2019 to C with recovery rating of RR5 from B- with recovery rating of RR4.

The notes are issued by Emeco's wholly owned subsidiary, Emeco Pty Ltd., and guaranteed by Emeco.

The outlook is negative.

The downgrades follow news that the company plans to address its capital structure, Fitch explained.

The company has acknowledged that its high leverage is unsustainable and is limiting its financial flexibility, the agency said.

Fitch said it believes that the company's capital structure review may include a restructuring or write-down of current outstanding debt.

The agency also said it considers such an outcome as probable, which led to the downgrades.

The downgrades also reflect the ongoing challenges in the sector, which caused a revision of the distressed enterprise value used in recovery calculations for the debt, Fitch added.

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