Ankura Holdings L.P.

Our stable outlook reflects our expectation that Ankura will generate positive organic revenue growth and improve its profitability and cash flow generation over the next 12 months due to cost efficiencies and acquisition integration. Although adjusted leverage including preferred shares will remain high at above 10x (about 9x without the preferred shares), we expect Ankura to generate $15 million-$30 million of reported FOCF in 2022. We could lower the rating on Ankura over the next 12 months if it did not generate consistent reported free cash flow above $15 million, which in our view would raise uncertainty regarding the sustainability of the capital structure. This could occur under a combination of the following factors: Organic revenue declines due to increased

...We believe the company has an aggressive financial policy and view additional debt-financed acquisitions as likely. We expect the company's leverage to remain high, despite improving EBITDA generation and mandatory debt repayment because of the sponsor's aggressive financial policy, which includes acquisitions and dividends funded with debt. In our view, while the company has benefited from the additional scale and business diversity from several acquisitions, this activity shows a high tolerance for debt leverage and an aggressive growth agenda by the sponsor. Although we do not include any explicit future acquisitions in our current base case forecast, we expect the company will continue this acquisitive growth strategy, which could include additional debt financings in the future. Considering the financial policy and the company's current debt burden, which includes treating the preferred shares as debt, we expect leverage to remain elevated at the mid-13x area in 2021 and 2022 before...

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