Moody’s slices REEF Global

Moody's Investors Service said it downgraded REEF Global Midco LLC's corporate family rating and backed senior secured first-lien bank credit facilities rating to Caa2 from B3 and its probability of default rating to Caa2-PD from B3-PD, with a negative outlook.

Previously, the ratings were being reviewed for downgrade. The downgrade reflects the weakening trend in the company's coverage ratio, limited financial flexibility, and a credible risk of covenant breach over the next few quarters, the agency said. The downgrades conclude the review for downgrade started on Oct. 24.

“Moody's considers the company's liquidity position to be weak because of the low cash balance of $25 million and limited remaining capacity on its $25 million revolving letter of credit facility of $12.5 million, both as of the end of the third quarter of 2023 and few alternate sources of liquidity. The risk of a covenant breach further constrains the company's financial flexibility,” the agency said in a press release.

The outlook reflects the company's uncertain operating income trend as the new management team restructures and the possibility of the cash interest coverage metric declining below 1x, Moody’s warned.

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