Research Update: Innovative Water Care Global Corp. Downgraded To 'CCC+' On Weak Operating Performance; Outlook Negative

Georgia-based water treatment products manufacturer Innovative Water Care Global Corp.'s (IWC's) operating performance has remained well below expectations in the fourth quarter of fiscal 2019 and the first quarter of fiscal 2020 because of volume declines with top customers and separation costs from its prior owners, leading to adjusted leverage increasing to near 14x as of March. 31, 2020. S&P Global Ratings expects many of these adverse operating trends to continue, keeping leverage well above 10x with negative free operating cash flow (FOCF) over the next 12 months, which will keep liquidity constrained. We are lowering our issuer credit rating to 'CCC+' from 'B-' to reflect our view that, absent a turnaround in operating performance, the company's capital structure is

...- Georgia-based water treatment products manufacturer Innovative Water Care Global Corp.'s (IWC's) operating performance has remained well below expectations in the fourth quarter of fiscal 2019 and the first quarter of fiscal 2020 because of volume declines with top customers and separation costs from its prior owners, leading to adjusted leverage increasing to near 14x as of March. 31, 2020. - S&P Global Ratings expects many of these adverse operating trends to continue, keeping leverage well above 10x with negative free operating cash flow (FOCF) over the next 12 months, which will keep liquidity constrained. - We are lowering our issuer credit rating to '###+' from 'B-' to reflect our view that, absent a turnaround in operating performance, the company's capital structure is unsustainable and liquidity will be constrained due to weak operating performance. - We are also lowering our issue-level rating on IWC's $360 million first-lien term loan due February 2026 to '###+' from 'B-' with...

Research Update