(CercleFinance.com) – Moody’s Investors Service announced on Friday evening that it had downgraded its credit rating on Technicolor Creative Studios (TCS) from ‘B2’ to ‘Caa1’, with a now ‘stable’ outlook.
The financial rating agency justifies the lowering of its rating by the severe warning issued last week by the visual effects specialist, forced to give up the objectives communicated on the occasion of its recent IPO due to problems related to its workforce.
Moody’s explains that the group’s new forecasts show a leverage ratio of 8x to 8.5x for 2022-2023, significantly higher than that of 4.5x-5x expected previously.
‘This significant contraction in results will lead to insufficient free cash flow (FCF) generation and therefore put pressure on the company’s cash flow’, worries the agency.
At Moody’s, the ‘Caa1’ rating, located in the speculative category, is supposed to reflect a ‘very high’ credit risk.
Despite this deterioration, the TCS action recovered by 11% on Monday morning on the Paris Stock Exchange, operating a small technical rebound after having lost 83% of its value following the ‘warning’ launched on Tuesday evening.
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