Moody's changes Armacell view to negative

Moody's Investors Service said it affirmed Neptune Holdco Sarl (Armacell)'s B3 corporate family rating and a B3-PD probability of default rating.

Concurrently Moody's affirmed the B3 instrument rating to the €710 million guaranteed senior secured term loan B and €110 million guaranteed senior secured revolving credit facility borrowed by Neptune Bidco Sarl and co-borrowed by Armacell Insulation United States Holding Inc., both subsidiaries of Neptune Holdco Sarl.

The outlook of both entities has been changed to negative from stable.

The rating action reflects Moody's expectations that (i) Armacell's gross leverage will remain around 8.0x over the next 12-18 months (8.6x as of June 2022), (ii) increasing interest rates will materially weaken the company’s interest cover and constrain its ability to improve cash flow generation.

“As a result, the rating agency believes Armacell is very weakly positioned in its current rating category with no capacity for prolonged operational underperformance,” Moody’s said in a news release.

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