Research Update: Forward Air Corp. Downgraded To 'B+' From 'BB-' On Weaker EBITDA Contribution From Omni Logistics; Outlook Stable

Following a period of litigation resulting in an amendment to the merger agreement for Omni Logistics LLC, Forward Air Corp. closed the merger on Jan. 25, 2024. We expect Forward Air's S&P Global Ratings-adjusted funds from operations (FFO) to debt will be 8.2%, well below previous expectations for the mid-teens percent area in 2024 due to weaker demand and an elevated cost structure at Omni. We therefore lowered our issuer credit rating on Forward Air to 'B+' from 'BB-' and our issue-level rating on its senior secured debt to 'B+' from 'BB-'. The '3' recovery rating is unchanged, indicating our expectation of meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a default. The stable outlook reflects our expectation

...- Following a period of litigation resulting in an amendment to the merger agreement for Omni Logistics LLC, Forward Air Corp. closed the merger on Jan. 25, 2024. We expect Forward Air's S&P Global Ratings-adjusted funds from operations (FFO) to debt will be 8.2%, well below previous expectations for the mid-teens percent area in 2024 due to weaker demand and an elevated cost structure at Omni. - We therefore lowered our issuer credit rating on Forward Air to 'B+' from '##-' and our issue-level rating on its senior secured debt to 'B+' from '##-'. The '3' recovery rating is unchanged, indicating our expectation of meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a default. - The stable outlook reflects our expectation that the company is likely to achieve FFO to debt in line with the rating over the next 12 months despite the current freight recession....

Research Update