Research Update: PHM Netherlands Midco B.V. Downgraded To 'B-' From 'B' On Elevated Debt Leverage, Outlook Stable; Debt Ratings Lowered

U.S.-based release liner manufacturer PHM Netherlands Midco B.V., owner of Loparex International B.V., is likely to experience 10%-15% lower sales and an even larger decline in EBITDA than expected as COVID-19 recessionary pressure slows end-market demands. We expect PHM Netherland's (PHM) already high debt leverage resulting from recently financed acquisitions to remain above 8x with interest coverage above 2x, based on our forecast. We are lowering our issuer credit rating on the company to 'B-' from 'B'. The outlook is stable. At the same time, we are lowering our issue-level ratings on the company's senior secured revolving credit facility (RCF) and first-lien term loan to 'B-' from 'B'. We are also lowering the issue-level rating on PHM's senior secured second-lien

...- U.S.-based release liner manufacturer PHM Netherlands Midco B.V., owner of Loparex International B.V., is likely to experience 10%-15% lower sales and an even larger decline in EBITDA than expected as COVID-19 recessionary pressure slows end-market demands. - We expect PHM Netherland's (PHM) already high debt leverage resulting from recently financed acquisitions to remain above 8x with interest coverage above 2x, based on our forecast. - We are lowering our issuer credit rating on the company to 'B-' from 'B'. The outlook is stable. - At the same time, we are lowering our issue-level ratings on the company's senior secured revolving credit facility (RCF) and first-lien term loan to 'B-' from 'B'. - We are also lowering the issue-level rating on PHM's senior secured second-lien term loan to '###' from '###+'. - The stable outlook reflects our view that the company will remain cash flow positive through 2020 while maintaining adequate liquidity with about $15 million of balance sheet cash...

Research Update