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Fitch: Navistar new loan B
Fitch Ratings said it affirmed the issuer default ratings at CCC for Navistar International Corp., Navistar, Inc. and Navistar Financial Corp. and affirmed the ratings for all of Navistar's debt.
Fitch also said it assigned a B rating with recovery rating of RR1 to Navistar, Inc.’s new $1.04 billion senior secured term loan facility.
Navistar announced that it plans to refinance Navistar, Inc.’s $697.5 million senior secured term loan facility, including increasing the amount to $1.04 billion and extending the maturity date to 2020, the agency said.
The proposed changes do not materially change the view of Navistar’s credit profile, Fitch said.
The new term loan increases liquidity and reduces scheduled annual debt maturities that would not exceed about $200 million until 2019, the agency said.
Fitch said it still expects Navistar’s financial performance to improve further as it streamlines its manufacturing operations and gradually regains market share with the completion of its revised engine strategy.
The ratings are constrained in the near term by the company’s free cash flow, which is expected to be negative in 2015, the agency added.
The company’s market share, particularly for heavy duty trucks, also has recovered slower than expected, Fitch said.
In addition to these concerns, the U.S. Department of Justice recently filed a lawsuit on behalf of the U.S. Environmental Protection Agency seeking penalties of up to $291 million related to Navistar’s use of engines during 2010 that did not meet emissions standards, Fitch said.
In the event of an adverse outcome, a large payment would reduce liquidity and slow an improvement in the company’s credit measures, the agency said.
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