Research Update: Array Midco Corp. ?CCC+? Issuer Credit Rating Affirmed On Improved Operating Performance; Outlook Negative

Toronto-based in-store marketing solutions provider Array Midco Corp.'s operating performance has modestly improved in the first half of 2023, following a weak year-end 2022, and we expect it to show a positive trend through 2023. However, Array's EBITDA is small and very volatile and the risk remains that liquidity can tighten quickly should Array underperform the seasonally strong third quarter. We forecast the company's coverage ratios to remain tight through the next six months amid a challenging macroenvironment. We therefore affirmed the 'CCC+' issue credit rating on Array Midco. We also affirmed the 'CCC+' issue-level rating on the company's term loan A. The recovery rating remains '3', reflecting meaningful (50%-70%; rounded estimate: 50%) recovery in a default scenario. The negative

...- Toronto-based in-store marketing solutions provider Array Midco Corp.'s operating performance has modestly improved in the first half of 2023, following a weak year-end 2022, and we expect it to show a positive trend through 2023. - However, Array's EBITDA is small and very volatile and the risk remains that liquidity can tighten quickly should Array underperform the seasonally strong third quarter. We forecast the company's coverage ratios to remain tight through the next six months amid a challenging macroenvironment. - We therefore affirmed the '###+' issue credit rating on Array Midco. We also affirmed the '###+' issue-level rating on the company's term loan A. The recovery rating remains '3', reflecting meaningful (50%-70%; rounded estimate: 50%) recovery in a default scenario. - The negative outlook reflects elevated risks, that against the backdrop of a tough macroeconomic environment, Array's EBITDA might remain subdued eventually straining liquidity. Because we view the company's...

Research Update