Research Update: Rinchem Co. LLC Downgraded To 'CCC+' On Elevated Leverage And Constrained Liquidity, Outlook Negative

Rinchem Co. LLC's earnings and cash flows have been weaker-than-expected over the last year due to a material decline in ocean shipping rates, which negatively affected its freight forwarding segment, as well as lower material handling volumes because of weaker demand for its services amid lower semiconductor chip production levels. We expect the company will generate negative reported free operating cash flow (FOCF) in 2023 and 2024, which will constrain its liquidity. Therefore, we expect Rinchem will further draw on its revolving credit facility to support its ongoing operations, growth strategy, and earnout obligations. This led us to revise our assessment of its liquidity to less than adequate. We lowered our issuer credit rating on Rinchem to 'CCC+' from 'B-'

...- Rinchem Co. LLC's earnings and cash flows have been weaker-than-expected over the last year due to a material decline in ocean shipping rates, which negatively affected its freight forwarding segment, as well as lower material handling volumes because of weaker demand for its services amid lower semiconductor chip production levels. - We expect the company will generate negative reported free operating cash flow (FOCF) in 2023 and 2024, which will constrain its liquidity. Therefore, we expect Rinchem will further draw on its revolving credit facility to support its ongoing operations, growth strategy, and earnout obligations. This led us to revise our assessment of its liquidity to less than adequate. - We lowered our issuer credit rating on Rinchem to '###+' from 'B-' and our issue-level rating on its first-lien facilities to '###+' from 'B-'. - The negative outlook reflects that the company could face liquidity constraints over the next 12 months if the recovery in semiconductor production...

Research Update