Moody’s cuts U.S. Farathane

Moody’s Investors Service said it downgraded U.S. Farathane, LLC’s corporate family rating to B3 from B2, probability of default rating to B3-PD from B2-PD and senior secured first-lien term loan rating to B3 from B2.

“The downgrade reflects the deterioration in U.S. Farathane’s EBITA margin due in part to increased production costs and inefficiencies arising from new program launches that is contributing to subdued free cash flow generation, weakened liquidity, and our view of a reliance on revolver borrowings at times to support required debt amortization. We expect an EBITA margin remaining in the low-teens range through 2020, which is a level well below historical performance. Further, the additional interest cost necessary to refinance the approaching 2021 debt maturities or amend the very tight leverage covenant will sustain weak free cash flow and the ability to reduce debt,” said Moody’s analyst Mike Cavanagh, in a press release.

The outlook is stable.

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