Moody’s ups Arvos outlook to positive

Moody's Investors Service said it affirmed Arvos Midco Sarl’s B3 corporate family rating and the B3-PD probability of default rating.

At the same time, the agency affirmed the B2 ratings assigned to Arvos Bidco Sarl’s first-lien senior secured term loan B and senior secured revolving credit facility and the Caa2 rating assigned to Arvos Ljungstrom LLC’s (formerly Arvos Inc.) second-lien term loan.

The second-lien term rating loan will be withdrawn upon full repayment from proceeds of a proposed term loan add-on.

The outlook on all ratings was changed to positive from stable.

Moody’s said the outlook change was triggered by (a) Arvos' ability to maintain fairly stable EBITDA while experiencing a material change in its market environment leading to a further revenue decline during fiscal year 2016/17 (March 31); (b) track record of material free cash flow generation; (c) good revenue visibility for the next 12 to 18 months resulting from a solid order book and stable aftermarket revenues; and (d) Moody's expectation of a gradual strengthening of key credit metrics supported by the completion of the company's restructuring program.

In addition, the agency said the planned refinancing of the company's $163 million second-lien term loan borrowed at Arvos Ljungstrom by increasing its first-lien term loan by €130 million will reduce the currency mismatch and lead to reduced interest expense supporting the generation of free cash flow.

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