Neovia Logistics L.P. Downgraded To 'CCC+' On Deteriorating Credit Metrics, Outlook Negative; Debt Ratings Lowered

Neovia Logistics L.P.'s operating performance continues to weaken, which has caused its credit metrics to deteriorate further. We believe that the company's credit measures will remain weak over the next 12 months due to a combination of ongoing contract losses, a shift in its revenue mix toward lower margin contracts, and increased operating costs. We also believe that Neovia's weakening revenue, earnings, and operating profitability could make it more difficult for the company to repay its payment-in-kind (PIK) notes, which mature in 2018. Therefore, we are downgrading Neovia Logistics L.P. to 'CCC+' from 'B-'. The negative outlook reflects our view that Neovia's ongoing contract losses--combined with several low margin start-up phase contracts--will cause its revenue and earnings to decline, leading

...+ Neovia Logistics L.P.'s operating performance continues to weaken, which has caused its credit metrics to deteriorate further. + We believe that the company's credit measures will remain weak over the next 12 months due to a combination of ongoing contract losses, a shift in its revenue mix toward lower margin contracts, and increased operating costs. + We also believe that Neovia's weakening revenue, earnings, and operating profitability could make it more difficult for the company to repay its payment-in-kind (PIK) notes, which mature in 2018. + Therefore, we are downgrading Neovia Logistics L.P. to '###+' from 'B-'. + The negative outlook reflects our view that Neovia's ongoing contract losses--combined with several low margin start-up phase contracts--will cause its revenue and earnings to decline, leading to continued margin deterioration and negative free operating cash flow. The combination of these negative factors leads us to view the company's capital structure as unsustainable...

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