TegenBeterWetenIn schreef op 2 november 2021 06:44:
En daar is de verwachte rating herziening.
New York, November 01, 2021 -- Moody's Investors Service ("Moody's") affirmed AMG Advanced Metallurgical Group N.V.'s ("AMG") B2 corporate family rating ("CFR") and B2-PD probability of default rating ("PDR"). Moody's also assigned a Ba3 rating to AMG's new revolving credit facility ("RCF") maturing in 2026 and the new term loan B ("TLB") maturing in 2028. Additionally, Moody's affirmed a B3 rating of the Ohio Air Quality Development Authority 30-year tax-exempt revenue bonds (State of Ohio Exempt Facilities Revenue Bonds) which are guaranteed by AMG Advanced Metallurgical Group N.V., the parent company of AMG Vanadium LLC. Proceeds from the new RCF and TLB will be used to refinance the existing revolver and TLB, pay for the transaction fees and expenses and for working capital and other general corporate purposes. The Speculative Grade Liquidity Rating is maintained at SGL-2. The ratings outlook is changed to positive from stable.
"The change in the outlook to positive from stable reflects Moody's expectations that AMG's financial performance and credit metrics will strengthen materially in 2022-2023 benefitting from the anticipated completion of the Cambridge II and Spodumene 1+ projects, improving demand for its products and the continuing recovery in the commercial aerospace demand", says Botir Sharipov, the lead analyst for AMG.
Assignments:
..Issuer: AMG Advanced Metallurgical Group N.V.
....Senior Secured Term Loan B, Assigned Ba3 (LGD2)
....Senior Secured Revolving Credit Facility, Assigned Ba3 (LGD2)
Affirmations:
..Issuer: AMG Advanced Metallurgical Group N.V.
.... Corporate Family Rating, Affirmed B2
.... Probability of Default Rating, Affirmed B2-PD
..Issuer: Ohio Air Quality Development Authority
....Gtd Senior Unsecured Revenue Bonds, Affirmed B3 (LGD5)
Outlook Actions:
..Issuer: AMG Advanced Metallurgical Group N.V.
....Outlook, Changed To Positive From Stable
RATINGS RATIONALE
AMG's B2 credit rating reflects its currently still high but improving financial leverage, good liquidity, broad geographic and end market diversity. The company has a strong market position with only a few major competitors for most of its critical materials and sells those materials to a number of blue-chip customers with whom it has established long- term relationships. The importance of its products in lightweighting, energy efficiency and carbon emissions reduction should provide for a relatively steady customer demand over the longer term. The rating is also supported Moody's expectations that AMG will preserve its good liquidity position throughout its current growth phase. AMG's rating is constrained by its modest scale versus higher rated manufacturers, increasing exposure to ferrovanadium, high capex and expectations of negative free cash flow in 2022-2023. The company will continue to benefit from the agreement with Glencore for the sale of the FeV from both Cambridge I and II plants that effectively removes the market volume risk and reduces its exposure to the FeV price volatility.
Moody's estimates that AMG will generate about $110 million in Moody's-adjusted EBITDA in 2021 and that leverage will improve to about 9.0x this year, benefitting from the implemented cost reductions, higher prices for most of the products it manufacturers and better end-market demand. Moody's expects that 2022 EBITDA will be in the range of $125-145 million and for 2023 Moody's-adjusted EBITDA to approach $180 million, which will reduce the leverage to about 5x by 2023 year-end. AMG is expected to begin generate positive free cash flow in 2024 after the company completes the construction of the Cambridge II project in the U.S (Q1 2022), Spodumene 1+ project in Brazil (2023) and the battery grade hydroxide plant in Germany (2023).
The positive outlook reflects Moody's view that a favorable demand environment, completion of growth projects and the continuing recovery in the commercial aerospace sector will lead to a material growth in AMG's revenues and EBITDA in 2022-2023 and result in improved credit metrics. The positive outlook also presumes that AMG will carefully manage its liquidity and the company will not experience any significant issues related to its growth projects.
AMG overall faces elevated environmental social and governance risks given the nature of the company's operations which include mining and high heat metallurgical processes and the location of some of its mines and facilities in emerging markets such as China and Brazil. The governance risk is also above average due to the management's high tolerance for elevated leverage. However, the AMG's $120 million equity issuance in April 2021 signifies the company's willingness to balance the interests of both equity and credit stakeholders.
We expect AMG to maintain good liquidity in the next 12-18 months, as reflected in the company's SGL-2 Speculative Grade Liquidity rating. AMG will have no meaningful debt maturities prior to the maturity date of the revolver in 2026 and the term loan B in 2028. As of September 30, 2021, the company had $319 million in cash and cash equivalents, $114 million in restricted cash for the Cambridge II project and $170 million available under its $200 million revolver, which is undrawn but has a reduced borrowing capacity due to the outstanding debt at the Brazilian subsidiary. Moody's expects the revolving facility to remain undrawn over the rating horizon. Moody's also expects the company to have ample headroom under its 3.5x first lien leverage covenant.
The Ba3 rating of the new senior secured revolving credit facility and senior secured term loan B reflects their priority position in the company's capital structure, strong liquidity position and pre-funded nature of the growth projects. The credit facilities are secured by a first priority lien on substantially all of the assets of several of the company's operating subsidiaries and a first priority lien on 100% of the capital stock (limited to 65% of voting stock for foreign subsidiaries) of each subsidiary borrower and each material wholly-owned subsidiary. However, the security package excludes the assets of a number of key foreign subsidiaries that account for about 50-60% of the overall assets of the company. The B3 rating of the tax-exempt unsecured bonds reflects a relatively high proportion of secured debt and the bonds' effective subordination to the secured debt. The bonds are issued by the Ohio Air Quality Development Authority and guaranteed by AMG Advanced Metallurgical Group N.V.