NEP/NCP Holdco, Inc: Update to credit analysis - Moody's Global Credit Research

NEP/NCP Holdco, Inc: Update to credit analysis

NEP/NCP Holdco, Inc: Update to credit analysis - Moody's Global Credit Research
NEP/NCP Holdco, Inc: Update to credit analysis
Published May 26, 2023
8 pages (4533 words) — Published May 26, 2023
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Brief Excerpt:

...NEP/NCP Holdco, Inc.'s (NEP) credit profile (Caa1 stable) reflects the company's highly levered capital structure, rising refinancing risk and highly capital-intensive business model that constrains free cash flow. We expect free cash flow to remain weak (negative $150 to $200 million in 2023) and financial leverage to remain high at about 6.5x - 7x (Moody's adjusted) over the next 12 to 18 months due to high capex and a high interest burden. The sponsor's and other investors' $95 million equity contribution year-to-date alleviated NEP's short term liquidity but did not address a fundamental challenge of the company's ability to self-fund its growth. Though we view NEP's liquidity as adequate over this year, the nearing debt maturities expose the company to significant refinancing risk. Without a material improvement in cash flow and meaningful debt reduction, there is risk related to NEP's ability to refinance maturities on terms that are consistent with a sustainable capital structure....

  
Report Type:

Credit Opinion

Company:
Issuer
NEP/NCP Holdco, Inc
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NEP/NCP Holdco, Inc: Update to credit analysis - Credit Opinion – 2022/11/22 – US$ 250.00 – ...NEP/NCP Holdco, Inc.'s (NEP) credit profile (B3 stable) reflects the company's highly levered capital structure, weak interest coverage and highly capital-intensive business model that restrains free cash flow. The company has a moderately aggressive acquisition strategy which may prevent sustained deleveraging. We expect Moody's adjusted Debt/EBITDA to be high, in the 6x-6.5x range over the next 12-18 months, despite earnings growth. The capital intensity of NEP's business combined with significant interest expense leaves it with limited, and historically negative, free cash flow and weak interest coverage. Given the sponsor ownership, the potential for future leveraging events are high, and this further constrains the rating. Nevertheless, NEP's ratings are supported by its strong global position in the niche video production industry and a diversified blue-chip customer base with long- standing relationships and low customer concentration. NEP's fleet of mobile broadcast trucks and engineering...

NEP/NCP Holdco, Inc: Update following CFR upgrade to B3, term loan add-on issuance - Credit Opinion – 2021/11/03 – US$ 250.00 – ...NEP/NCP Holdco, Inc.'s (NEP, B3 stable) credit profile reflects the company's highly levered capital structure and highly capital-intensive business model that restrains free cash flow. The company has a moderately aggressive acquisition strategy which may prevent sustained deleveraging. We expect Moody's adjusted Debt/EBITDA to be high, in the 6x - 6.5x range over the next 12-18 months, despite earnings growth. The capital intensity of NEP's business combined with significant interest expense leaves it with limited, and historically negative, free cash flows and weak interest coverage. Given the sponsor ownership, the potential for future leveraging events are high, and this further constrains the rating. Nevertheless, NEP's ratings are supported by its strong global position in the niche video production industry and a diversified blue-chip customer base with long-standing relationships and low customer concentration. NEP's fleet of mobile broadcast trucks and engineering expertise provide...

Moody's rates NEP's term loan at B3 - Rating Action – 2021/11/03 – US$ 180.00 – ...MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT...

NEP/NCP Holdco, Inc: Update following rating upgrade and outlook change - Credit Opinion – 2020/10/12 – US$ 250.00 – ...NEP/NCP Holdco, Inc.'s ("NEP") credit profile is constrained by: (1) the company's highly leveraged capital structure, with debt-to-EBITDA leverage (Moody's adjusted) of 11.2x for the LTM period ended June 30, 2020, which could considerably increase due to the significant EBITDA deterioration in the first half of FY 2020; (2) operating headwinds in the live events segment, including the risk for protracted revenue and earnings contraction due to the COVID-19 pandemic and uncertainties around the global macroeconomic outlook; (3) a highly capital intensive business model that restrains free cash flow driven by contract requirements and technology demands; (4) foreign currency exchange risk with about 50% of NEP's revenue generated from outside of the United States (5) moderate social and reputational risks; and (6) private equity ownership and an aggressive acquisition strategy which could lead to persistent elevated leverage levels. However, the company benefits from: (1) a strong global...

NEP/NCP Holdco, Inc: Update following incremental debt raise - Credit Opinion – 2020/06/15 – US$ 250.00 – ...NEP's credit profile reflects meaningful uncertainty regarding the company's earnings over the course of 2020 and 2021, as various sporting competitions and live event productions are considering reopening as social distancing requirements and the spread of coronavirus outbreak moderates. We anticipate that to the extent that sports and live events restart, NEP will be able to deliver its outsourced broadcasting services as contemplated under its contracts. However, we also expect that sporting and live events restart may be gradual and measured, with many events returning in modified format. In addition, the potential for recurrence of an outbreak may limit how quickly traditional live events restart and may also lead to some pauses in the competitive sports following a period of reopening. Though newly raised $125 million in incremental committed first lien term loans provide for improved liquidity for NEP, the incremental debt also increases leverage and interest expense during a period...

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Moody's Global Credit Research—Moody's Investors Service, a leading global credit rating, research and risk analysis firm, publishes credit opinions, research, and ratings on fixed-income securities, issuers of securities and other credit obligations. Credit ratings and research help investors analyze the credit risks associated with fixed-income securities. Ratings also create efficiencies in fixed-income markets and similar obligations, such as insurance and derivatives, by providing reliable, credible, and independent assessments of credit risk. For issuers, Moody's services increase market liquidity and may reduce transaction costs.

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Cite this Report

  
MLA:
Moody's Global Credit Research. "NEP/NCP Holdco, Inc: Update to credit analysis" May 26, 2023. Alacra Store. Jun 15, 2024. <http://www.alacrastore.com/moodys-credit-research/NEP-NCP-Holdco-Inc-Update-to-credit-analysis-PBC_1354572>
  
APA:
Moody's Global Credit Research. (). NEP/NCP Holdco, Inc: Update to credit analysis May 26, 2023. New York, NY: Alacra Store. Retrieved Jun 15, 2024 from <http://www.alacrastore.com/moodys-credit-research/NEP-NCP-Holdco-Inc-Update-to-credit-analysis-PBC_1354572>
  
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