APTIM plans to hold non-deal roadshow meetings with investors in mid-June, according to two sources familiar with the matter. The outreach comes as the industrial services company’s bonds have languished in trading following declining 1Q19 earnings and an S&P downgrade.
Meetings are scheduled in New York on 18 June and in Los Angeles on 19 June, the sources said.
Earlier this week, S&P downgraded APTIM, cutting its corporate rating to CCC+ from B-, citing higher-than-expected leverage for the LTM period ended 31 March.
The Veritas Capital-owned company’s LTM EBITDA as of 31 March was 52% than it was a year ago, and 18% lower versus 31 December, 2018.
Leverage increased by nearly two turns from the prior quarter, to 10.3x based on USD 515m of total debt and USD 50m of LTM EBITDA. Leverage balloons to 16.6x if factoring in the cap on EBITDA add-backs which brings LTM EBITDA to USD 31m, as reported.
As of 31 March, APTIM’s liquidity totaled roughly USD 137m, based on USD 37.6m of revolver availability and USD 99m of cash on hand.
The company’s USD 515m 7.75% secured notes due 2025 dipped a point on 4 June after the downgrade to trade at 77.5 for a yield of 13.292%, from trades in the 78-79 range in late May, according to MarketAxess. The bonds recovered to close at 78.75 to yield 12.934% on 4 June.
APTIM was created as a standalone company in mid-2017 when Veritas acquired Chicago Bridge & Iron’s Capital Services business, as CB&I sold assets to deal with near term maturities and covenant compliance.
Veritas bought the business for USD 755m, financing the sale with the 2025 notes. APTIM began struggling with contract losses shortly after the buyout financing.
Contracts appeared to turn a corner in 1Q19, however, with the company reporting USD 473.5m of newly awarded contracts, up from USD 338.8m in 1Q18, one of the sources said.
A spokesperson for APTIM and UBS did not respond to requests for comment.