Research Update: M6 ETX Holdings II MidCo LLC Ratings Affirmed Despite Lower Forecast EBITDA, Outlook Stable

M6 ETX Holdings II MidCo LLC (M6 ETX) is a Texas-based natural gas gathering, processing, and transportation company that operates in the Haynesville Basin. We lowered our 2023 and 2024 EBITDA forecast for the company due to delayed well completions on its dedicated acreage and our expectation for reduced throughput volumes. Although we expect M6 ETX's leverage will exceed 5.0x this year, we anticipate it will deleverage to 4.5x in 2024. Therefore, we affirmed our 'B+' issuer credit rating on M6 ETX and our 'B+' issue-level rating on its term loan B (TLB). Our '3' recovery rating on the TLB is unchanged, indicating our expectation for meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a payment default. The

...- M6 ETX Holdings II MidCo LLC (M6 ETX) is a Texas-based natural gas gathering, processing, and transportation company that operates in the Haynesville Basin. We lowered our 2023 and 2024 EBITDA forecast for the company due to delayed well completions on its dedicated acreage and our expectation for reduced throughput volumes. - Although we expect M6 ETX's leverage will exceed 5.0x this year, we anticipate it will deleverage to 4.5x in 2024. - Therefore, we affirmed our 'B+' issuer credit rating on M6 ETX and our 'B+' issue-level rating on its term loan B (TLB). Our '3' recovery rating on the TLB is unchanged, indicating our expectation for meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a payment default. - The stable outlook reflects our expectation that the company's S&P Global Ratings-adjusted debt to EBITDA will be about 5.5x in 2023 before declining to 4.5x in 2024 as higher gas prices support an increase in its EBITDA....

Research Update