Bowie Resource Partners LLC could face a liquidity shortfall in the next year if it fails to extend its revolving credit facility, S&P Global Ratings said in a downgrade of the U.S. coal producer.
The company's liquidity may be insufficient to cover its revolver due in August and mandatory amortizations, a June 8 ratings action said. S&P Global Ratings dropped its corporate credit rating for Bowie from "CCC+" to "CCC," lowered the rating on the company's $335 million first-lien and $100 million second-lien term loans to "B-" and "CC" from "B" and "CCC" and placed all ratings on CreditWatch with negative implications.
"While long-term contracts with large utility customers provide some stability to future cash flows, we view the business to be vulnerable to unexpected outages or operational disruptions given its smaller size and dependence on two anchor customers," the rating agency wrote.
Bowie's expected adjusted EBITDA is expected to peak at $124 million in 2018 due to stable long-term contracts and higher export sales, but the rating agency believes that prices could soon decline and reduce the company's adjusted EBITDA. The company is forecast to run into a $60 million liquidity deficiency in the next 12 months.
This S&P Global Market Intelligence news article contains information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.
