NEP/NCP Holdco Inc.

The stable outlook reflects S&P Global Ratings' view that NEP will continue to grow organically through new contract wins in addition to making bolt-on debt-funded acquisitions across its business segments and geographic footprint. The outlook also reflects our expectation that adjusted leverage will remain elevated above the mid-5.0x range over the next 12 months, and for deleveraging to occur mainly through EBITDA growth. We could lower our issuer credit rating if competitive pressures in the industry leads to NEP losing key clients while facing intense pricing pressure. We believe this could precipitate a cash flow decline and significant deterioration of liquidity, challenging the company's ability to maintain leverage below the mid-6.0x range. We could raise the rating if the company

...NEP's strong market position, large scale, and geographic reach are distinct competitive advantages within a fragmented industry landscape. The company has effectively utilized its scale to secure high-profile global events, such as the Olympics and the Commonwealth Games. It also benefits from its established long-term relationships with some of the media industry's largest blue-chip companies, resulting in high renewal rates and long-term contracts providing good revenue visibility and stability for its broadcast services segment (about 60% of 2019 estimated revenue). Leverage remains elevated due to the high capital intensity and debt-financed acquisitions over the past year. NEP's capital expenditure requirements are especially elevated during build-out phases associated with new contract wins or contract renewals. While this has created a natural barrier to entry against competitors, given the significant infrastructure spend and global footprint required to effectively compete, NEP...

Full Report