Fitch rates Advancion B-

Fitch Ratings said it downgraded Aruba Investments, Inc.'s long-term issuer default rating to B- from B. Concurrently, the agency withdrew Aruba Investments' B- rating. The agency also assigned a B- long-term IDR to Advancion Holdings, LLC (Advancion; OpCo), the sole borrower under the first-lien and second-lien credit facilities. Additionally, Fitch lowered Advancion's existing long-term issue ratings for its first-lien senior secured revolver and term loans to B+/RR2 from BB-/RR2, and its second-lien term loan to CCC/RR6 from CCC+/RR6.

The agency concurrently downgraded Advancion Sciences, Inc.'s (HoldCo; formally Kobe US Midco 2, Inc.) long-term IDR to CCC+ from B-, and the HoldCo PIK toggle notes' long-term issue rating to CCC-/RR6 from CCC/RR6.

“The downgrade of the ratings reflects Fitch's expectations for continued weakness in earnings over the medium term, which could pressure the company's elevated EBITDA leverage profile, forecast at above 8x through 2024. The downgrades also reflect the company's reduced financial flexibility, exhibited by forecasts for negative FCF and interest coverage of below 1.5x through 2024. The rating is supported by Advancion's strong and stable EBITDA margins, position as a sole-source supplier for the majority of its revenue base, and adequate liquidity,” Fitch said in a press release.

The outlook is stable.

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