MW Industries upgraded to B3 by Moody's on improving margins, metrics

Helix Acquisition Corp., doing business as MW Industries Inc., was upgraded Oct. 29 by Moody's to B3 from Caa1, retaining its stable outlook, with the agency citing the company's improving EBITDA margins and credit metrics. MW's senior secured first-lien credit facilities were upgraded to B2 from B3, while a new first-lien term loan and revolver needed to fund two acquisitions were assigned a B2 rating. MW's senior secured second-lien term loan was upgraded to Caa2 from Caa3.

Moody's said the new rating reflects MW's "significant product offering and improving financial flexibility despite its small revenue scale and the highly cyclical end markets that it serves." The agency noted the company's strong margins, low capital expenditure needs, successful merger integration record and recent production streamlining efforts.

Moody's projects MW's leverage will be about 5.5x by the end of 2022. Liquidity is expected to be "adequate," with cash of $5 million to $10 million on the balance sheet, positive free cash flow over the next two years and full availability under the company's $70 million revolving credit facility.

In October, S&P Global Ratings upgraded MW to B- and a stable outlook from CCC+ and a negative outlook, with the agency citing better-than-projected performance in fiscal 2020, along with the positive impact of the two impending acquisitions. The company's existing first-lien senior secured credit facilities, including a term loan due 2024 (L+375%, 0% floor), also were raised to B- from CCC+.

MW Industries manufactures specialized industrial components, mainly springs and fasteners, for the general industrial, automotive aftermarket, petrochemical, medical, heavy track and aerospace markets, mainly in North America. It is owned by sponsor American Securities.