Moody's Affirms Indicor's B2 Corporate Family Rating Amid Refinancing Plans

Strategic Insights -

Moody's Ratings has affirmed the B2 corporate family rating (CFR) and B2-PD probability of default rating of Indicor, LLC, while downgrading the company's senior secured bank credit facility rating to B2 from B1. The affirmation of the CFR reflects Indicor's solid market position, steady operating margin, and good liquidity, while the downgrade reflects the company's high financial leverage and refinance plans.

Moody's has also assigned a B2 rating to Indicor's proposed $300 million senior secured revolving credit facility with a maturity date in May 2029. The company plans to issue a $475 million-equivalent fungible add-on to its dollar- and euro-denominated senior secured term loans, using the proceeds to refinance its $475 million second lien term loan. The refinancing transaction will not increase Indicor's total debt level.

The affirmation of the CFR considers Indicor's solid market position, steady operating margin, and good liquidity, with the company maintaining a good market position as a provider of preparation and testing equipment, sensors, and flow control systems to various end markets globally. Indicor has solid margins resulting from its asset-light business model and the critical nature of its products. However, the company has exposure to volatile end markets, including oil and gas, and high financial leverage.

Key Takeaways:

  • Indicor's B2 CFR reflects its solid market position, steady operating margin, and good liquidity.
  • The company plans to issue a $475 million-equivalent fungible add-on to its dollar- and euro-denominated senior secured term loans, using the proceeds to refinance its $475 million second lien term loan.
  • Moody's assigned a B2 rating to Indicor's proposed $300 million senior secured revolving credit facility with a maturity date in May 2029.
  • The company intends to maintain a conservatively leveraged financial policy to support lower leverage.
  • Indicor will continue to refine its portfolio and reduce its exposure to the more volatile oil and gas sector over time.

Statistics:

  • Moody's affirmed the B2 corporate family rating of Indicor, LLC.
  • The company's senior secured bank credit facility rating was downgraded to B2 from B1.
  • Indicor plans to issue a $475 million-equivalent fungible add-on to its dollar- and euro-denominated senior secured term loans.
  • The company's refinancing transaction will not increase its total debt level.
  • Moody's expects Indicor's debt-to-EBITDA to remain below 5.0x over the next 12-18 months.
  • The company's liquidity is supported by its expectation for free cash flow of more than $20 million over the next 12 months.

Sources:

  • Moody's Investors Service, "Moody's Ratings Affirms Indicor's B2 Corporate Family Rating Amid Refinancing Plans" (no date provided).
  • Moody's, "Manufacturing" (published in September 2021), available at https://ratings.moodys.com/rmc-documents/74970.
  • Indicor, LLC, "Indicor, LLC Has a Good Portfolio of Brands Serving the Materials Preparation and Testing, Sensors and Flow Control Applications Sectors Globally" (no date provided).