Gulf Finance raised to B3 with 'LD' designation by Moody's after debt reduction

Gulf Finance LLC was upgraded today by Moody's to B3 and a stable outlook, from Caa3 and ratings under review, with the agency citing the company's recent partial paydown of its term loan via an equity contribution by its private equity sponsor. The now $720 million term loan (L+675, with a 1% floor), whose maturity was pushed out to August 2026 via an October amend-and-extend transaction, was upgraded to Caa1 from Caa3.

Moody's also revised the company's probability of default rating to B3-PD/LD, from Caa3-PD, in recognition of the amend-and-extend being a "distressed exchange, which is a default under [Moody's] definitions." The LD designation will be removed "shortly."

Moody's said sponsor ArcLight Capital converted term loan holdings and contributed equity, resulting in the outstanding term loan being reduced from $1.05 billion to its current $720 million, while also extending the maturity of the remaining balance to 2026 from 2023. Moody's noted that the move "provides the company with increased runway to further reduce leverage."

The agency added that it expects Gulf to "maintain adequate liquidity," with $193 million available on its $500 million asset-based lending facility maturing in 2024.

Gulf Finance engages in terminaling, storage and logistics of refined petroleum products. It is owned by private equity firm ArcLight Capital Partners.