Moody’s Investors Service downgraded Alterra Mountain Company’s corporate family rating (CFR) to B2 from B1 and probability of default rating (PDR) to B2-PD from B1-PD.

Concurrently, Moody’s downgraded the rating for Alterra’s first-lien revolver and term loan to B2 from B1. At the same time, Moody’s assigned a B2 rating to the company’s proposed incremental $250 million senior secured first-lien term loan due 2026. Proceeds from the term loan will be used for general corporate purposes. The outlook is stable.

Moody’s said in a statement, “The downgrade of CFR to B2 reflects Moody’s expectation that Alterra’s earnings will decline in the fiscal year ending July 31, 2021 from already softer levels generated in FY 2020 and that leverage will remain elevated even with an expected recovery in FY 2022. The additional add-on term loan will increase debt-to-EBITDA leverage to slightly above 10x for FY2021 given the expected earnings decline. The upcoming 2020-2021 ski season will be challenging due to social distancing measures and capacity constraints as the result of the ongoing coronavirus pandemic. There is also the possibility of shutdowns in certain locations if the coronavirus situation continues to worsen this winter. Looking past FY 2021, Moody’s expects debt-to-EBITDA leverage will decline to a 5.5x-6.5x range with the assumption that earnings will recover in FY 2022 to a similar level as FY 2019 and the company will use excess balance sheet cash to repay most or all of the recently issued debt once economic uncertainty diminishes. With the additional $250 million add-on term loan on top of the $400 million term loan issued in June, Alterra’s very good liquidity will be beneficial for the company to manage through the uncertain operating environment in FY2021 and this was an important factor in the stable outlook.”

Photo courtesy Alterra Mountain