Research Update: American Rock Salt Co. LLC Downgraded To 'CCC-' On Heightened Default Risk; Outlook Negative; Debt Lowered

American Rock Salt Co. LLC reported materially weaker earnings and cash flows for the first six months of fiscal 2024 ending March 31, 2024, due to low volumes from mild winter weather and lost market share. At the same time, the company has a significant quarterly interest obligation coming due in late August in the face of narrowing liquidity, which increases the risk of default, in the absence of any capital injection. We therefore lowered our issuer credit rating on American Rock Salt to 'CCC-' from 'CCC+'. We also lowered our issue-level rating on company's first-lien debt to 'CCC-' from 'CCC+' and revised our recovery rating to '4' from '3'. At the same time, we lowered our issue-level rating on

...- American Rock Salt Co. LLC reported materially weaker earnings and cash flows for the first six months of fiscal 2024 ending March 31, 2024, due to low volumes from mild winter weather and lost market share. - At the same time, the company has a significant quarterly interest obligation coming due in late August in the face of narrowing liquidity, which increases the risk of default, in the absence of any capital injection. - We therefore lowered our issuer credit rating on American Rock Salt to '###-' from '###+'. - We also lowered our issue-level rating on company's first-lien debt to '###-' from '###+' and revised our recovery rating to '4' from '3'. At the same time, we lowered our issue-level rating on the company's second-lien debt to 'C' from '###-'. The associated recovery rating remains '6'. - The negative outlook reflects the company's weakening liquidity position and significant risk of a default or debt restructuring this year....

Research Update