Research Update: AIP MC Holdings LLC Downgraded To 'B-' On Elevated Credit Metrics; Outlook Stable

Grinding media producer AIP MC Holdings LLC?s (Molycop) credit metrics will remain elevated during fiscal 2024 as it completes restructuring efforts to lower its cost profile. While we expect leverage to be above 7x this year, we believe higher gold and copper prices will support end market demand, leading to gradual deleveraging in fiscal 2025 onwards. However, the company's credit cushion has diminished because of an increase in debt and spending on restructuring and transactions that pressured earnings. As a result, we lowered our rating on Molycop to 'B-' from 'B' and lowered our issue-level rating on the company's first-lien term loan to 'B-'. The '3' recovery rating remains unchanged. The stable outlook reflects our expectation that Molycop's debt to

...- Grinding media producer AIP MC Holdings LLC's (Molycop) credit metrics will remain elevated during fiscal 2024 as it completes restructuring efforts to lower its cost profile. - While we expect leverage to be above 7x this year, we believe higher gold and copper prices will support end market demand, leading to gradual deleveraging in fiscal 2025 onwards. - However, the company's credit cushion has diminished because of an increase in debt and spending on restructuring and transactions that pressured earnings. - As a result, we lowered our rating on Molycop to 'B-' from 'B' and lowered our issue-level rating on the company's first-lien term loan to 'B-'. The '3' recovery rating remains unchanged. - The stable outlook reflects our expectation that Molycop's debt to EBITDA will trend to 7x over the next 12 months as the impact to earnings from the recent restructuring efforts lessens and market conditions and commodity prices support a healthy demand and customer production base....

Research Update