Investing.com -- Moody’s Ratings announced on March 10, 2025, an upgrade to the long-term corporate family rating (CFR) for Viridien S.A., taking it from B3 to B2. Viridien’s probability of default rating (PDR) also saw an upgrade to B2-PD from B3-PD. Alongside these upgrades, Moody’s assigned B2 ratings to Viridien’s proposed new $950 million five and a half year backed senior secured notes, which are to be issued in both EUR and USD tranches.
The funds raised from this issuance, along with available cash, will be used by Viridien to redeem its legacy backed senior secured notes, reduce gross debt, pay accrued interest, and cover related fees and expenses. Moody’s anticipates withdrawing the ratings on Viridien’s legacy backed senior secured notes upon their complete repayment. The outlook for Viridien remains stable.
The upgraded rating comes after a comprehensive review of all credit ratings for the issuer. This upgrade reflects Viridien’s reduced gross debt and an improved maturity profile expected following debt refinancing. The company has been able to use excess cash for refinancing and reducing debt through open market bond repurchases in 2024.
The rating action also takes into account Viridien’s strong backlog for geoscience revenue and a structural improvement in its EBITDA and cash generation. This improvement follows the termination of its Shearwater vessel agreement that had previously constrained profitability and cash flow over the past five years.
Over the next 12-18 months, Moody’s expects Viridien to witness a stable to improving market for seismic data, along with growth in its Beyond the Core (BTC) businesses. The expiration of an unfavorable vessel contract is expected to lead to incremental improvement in EBITDA. However, some quarterly variability in results is anticipated due to the company’s IFRS reporting and the potential uneven nature of Sensing and Monitoring (SMO) orders.
The company’s liquidity is good, with an estimated $148 million of cash on hand expected after the transaction. Viridien is also expected to have full availability on its new $125 million super senior secured revolving credit facility. The company’s cash balance typically includes a modest amount of trapped cash held by subsidiaries operating in countries with exchange controls or other legal restrictions. This trapped cash has been decreasing over the past years, and is expected to remain in a range of around $35-$50 million.
Governance considerations for Viridien were a significant driver of the rating action, reflecting Viridien’s reduction of gross debt in 2024 through bond repurchases and use of excess cash as part of the refinancing to reduce gross debt levels. It also factors in the company’s public commitments to deleveraging.
Factors that could lead to further rating upgrades include greater business diversification, consistent maintenance of Moody’s adjusted debt/EBITDA below 2.5x, EBITDA/Interest consistently above 3.5x, sustained positive Moody’s adjusted free cash flow, and maintenance of a good liquidity position. Meanwhile, factors that could lead to a rating downgrade include a deterioration in the oil & gas industry spending on seismic services leading to an adjusted debt/EBITDA materially and consistently above 4.5x, EBITDA/Interest consistently below 2.5x, negative free cash flow leading to a deterioration in the company’s liquidity profile, or the enactment of more aggressive financial policies or a failure to reduce gross debt.
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