Moody’s downgrades Emerald, loans

Moody's Investors Service said it downgraded Emerald 2 Ltd.’s (holding company of Environmental Resources Management, ERM) corporate family rating to B3 from B2 and probability of default rating to B3-PD from B2-PD.

At the same time, the agency downgraded Emerald 3 Ltd.'s first-lien senior secured facilities instrument ratings to B2 from B1 and second-lien secured facilities instrument rating to Caa2 from Caa1.

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

Moody’s said the downgrade reflects Environmental Resources’ continued soft trading with pressure on top-line and margins that will result in the company's financial leverage remaining significantly above 7 times.

In addition, the B3 corporate family rating reflects Environmental Resources’: (a) Exposure to the energy, commodity and mining sector resulting in pressure on top line and margins; (b) financial covenants restrict access to revolving credit facility and prohibit Permitted Acquisitions; and (c) reliance to retain key quality staff, the agency explained.

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