PetroChoice Holdings Inc. was downgraded on Jan. 25 by S&P Global Ratings to CCC+ and Credit Watch Negative, from B- and a negative outlook, on concerns about the company's liquidity in the face of a "challenging" economic environment. Ratings on the company's borrowings were cut as well, with the first-lien credit facility dropped to B-, from B, and the second-lien loan to CCC-, from CCC.
S&P Global Ratings said the company at Sept. 30 had $4.4 million of cash on its balance sheet and roughly $37 million in revolver availability, but by mid-2021 the rating agency expects "total liquidity sources to fall below $10 million." Ratings believes PetroChoice requires $5 million–$10 million in liquidity to operate its business.
Ratings also noted looming debt maturities, specifically a $40 million senior secured revolving credit facility and pari passu $296.5 million senior secured first-lien term loan, both due in August 2022. Ratings said it believed the debt "could be difficult to refinance absent a sharp turnaround in business performance."
PetroChoice is a value-added distributor of industrial and automotive lubricants.