Moody's Assigns B1 Rating to Aggreko's Proposed Backed Senior Secured Notes

Strategic Insights -

Aggreko, a leading global provider of modular power generation and temperature control equipment, has announced plans to refinance its debt with the issuance of backed senior secured notes due 2030. Moody's Investors Service has assigned a B1 rating to these notes, reflecting the company's sustained strong performance and expectations of continued robust growth. The rating action also incorporates Aggreko's planned significant capital investment program, which will fuel its rapid growth trajectory but result in negative free cash flow.

Key Takeaways:

  • Moody's has assigned a B1 rating to Aggreko's proposed backed senior secured notes due 2030.
  • The rating reflects Aggreko's sustained strong performance and expectations of continued robust growth underpinned by rising global demand for power.
  • The company's planned significant capital investment program will fuel its rapid growth trajectory but result in negative free cash flow.
  • Aggreko's leverage is expected to decrease from 5.1x in 2024 to 4.4x in 2025 and further to 4.0x by 2026.
  • The company's coverage ratios are also expected to improve, from 2.1x pro forma in 2024 to 2.7x in 2025 and 3.3x by 2026.
  • Aggreko will consume over $1 billion of cash in 2025 and close to $0.5 billion in each of 2026 and 2027.
  • The company's B1 corporate family rating reflects its strong leadership in mobile modular power, temperature control, and energy services, with promising growth prospects.
  • Aggreko benefits from a large fleet of power generators and temperature control equipment, often used in remote locations with no alternative energy sources.

Statistics:

  • Aggreko's revenue grew by 13.9% in 2024, while its EBITDA margin (Moody's-adjusted) was 36.6%.
  • The company's planned capital investment program will result in negative free cash flow, but most of the expenditure is discretionary and aimed at maintaining and expanding the fleet.
  • Aggreko's leverage is expected to decrease from 5.1x in 2024 to 4.4x in 2025 and further to 4.0x by 2026.
  • The company's coverage ratios are expected to improve, from 2.1x pro forma in 2024 to 2.7x in 2025 and 3.3x by 2026.

Sources:

  • Moody's Investors Service: Equipment and Transportation Rental (published in December 2024) [1]
  • Moody's Investors Service: Aggreko Holdings Inc. (Issuer: Aggreko Holdings Inc.) [2]
  • Company Profile: Albion HoldCo Limited (Aggreko) [3]

[1] https://ratings.moodys.com/rmc-documents/434126

[2] https://ratings.moodys.com/ratings

[3] Company Profile: Albion HoldCo Limited (Aggreko)