Ratings house, Moody’s has downgraded Emeco Holdings Limited (ASX:EHL) 2019 notes to a rating of ‘Ca’.
The earthmoving equipment company says it was a consequence of its merger with Andy's Earthmovers and Orionstone Holdings which was announced last week.
Under Moody’s Investors Services definition, the recapitalisation of Emeco, and the merger constitutes a ‘distressing exchange’, whereby Emeco ‘offers creditors a new or restructured debt’.
Moody’s also noted that Emecos ‘leverage is expected to reduce’ and it has reaffirmed Emerco’s corporate family rating at ‘Caa1’.
Once the transaction is finalised on 31 March 2017, Moody’s will review both the new senior notes secured and the company’s corporate rating.
Shares in Emeco closed last traded 4% lower at 7.2 cents.