IBC Capital Ltd.

The negative outlook reflects the risk that a protracted weakness in the automotive industry exacerbated by the pandemic may result in Goodpack's EBITDA interest coverage falling below 1.75x and debt-to-EBITDA ratio exceeding 7.5x. It also reflects Goodpack's weakened liquidity position due to refinancing risks on its RCF maturing in less than 12 months. We may lower the ratings on Goodpack if business prospects do not recover, causing the company's EBITDA interest coverage to fall below 1.75x sustainably or its debt-to-EBITDA ratio to remain above 7.5x. Although a multi-notch downgrade is less likely, it could be precipitated by Goodpack's inability to refinance its RCF maturing in March 2021 in a timely manner. We may revise the outlook to stable if business

...Soft demand across the broader automotive industry due to the pandemic will weigh on Goodpack's earnings, resulting in elevated leverage over the next 12 months. The spread of the coronavirus has triggered unprecedented containment actions, including the shutdown of many businesses and reduction in trade activities. Over the past three months, major automakers have halted production and this has led to a fallout in IBC Capital Ltd.'s (Goodpack) leasing solutions, which derives more than 80% of its revenue from the rubber segment. We believe the full earnings impact from the COVID-19 pandemic will lag for Goodpack and is likely to become more pronounced in fiscal 2021....

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