Skip to main content
EVENT TRACKER
Keep track of rescheduled, canceled industry events with our COVID-affected event tracker - Powered by Snap Finance
Close
Sister Publication Links
  • Rubber & Plastics News
  • European Rubber Journal
tb-logo
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • OPINION
    • CORONAVIRUS
    • AUTO INDUSTRY
    • BUSINESS/FINANCIAL
    • COMMERCIAL TIRE
    • FACTORY FIXES
    • GOVERNMENT & LAW
    • INTERNATIONAL
    • MOTOR SPORTS
    • NEW PRODUCTS
    • RETAIL TIRES
    • SERVICE ZONE
    • SEMA/AAPEX
    • SMALL BUSINESS
    • TIRE MAKERS
    • SPONSORED CONTENT
    • Tire Cologne canceled; rescheduled until 2022
      New round of Paycheck Protection Program funding opens
      Vaccine may usher sense of normalcy
      Cover-up: More retailers requiring face masks to curb COVID
    • DTM switches horses mid-stream; awards race tire contract to Michelin
      Icahn Auto trims fiscal 2020 operating loss despite 14% lower sales
      Oshkosh unit gets contract for new USPS local delivery vehicle
      Sumitomo adds treadwear-detection to 'Sensor Core' toolkit
    • CarAdvise partnering with RepairSmith mobile repair services
      Goodyear to raise prices by up to 8% on all passenger tires on April 1
      Point S posts strongest year ever in sales profit, growth, store growth
      Conlan Tire buys BestDrive locations in Ark., Okla., Texas from Continental
    • Conlan Tire buys BestDrive locations in Ark., Okla., Texas from Continental
      Michelin upgrades 2 lines of Energy-branded truck tires
      TravelCenters plans 6 TA Express sites in California in 2021
      Carlisle TyrFil broadens recycling technology options
    • USTMA joins coalition supporting passage of Equality Act
      McMahon's Best-One increases its minimum wage to $15
      Oshkosh unit gets contract for new USPS local delivery vehicle
      Conti recalling 94,000 Conti-, General-, Barum-brand LT/SUV tires
    • DTM switches horses mid-stream; awards race tire contract to Michelin
      Sentury's 10-year global expansion strategy will include plants in North America, Europe
      Rebound in car tire demand drives USTMA market forecast for 2021
      Michelin driving for '100% sustainable' tires by 2050
    • DTM switches horses mid-stream; awards race tire contract to Michelin
      Bridgestone World Solar Challenge canceled due to pandemic restrictions
      Pirelli, Goodyear ink sedan racing series contracts in Canada, Europe
      Goodyear extends partnership with Nürburgring race circuit
    • U.S.-sourced Milestar Weatherguard AS710 offers all-season value
      Michelin upgrades 2 lines of Energy-branded truck tires
      Falken revamps winter tire lineup with studless Eurowinter products
      Michelin launching ‘eco-responsible' performance tire for sporty EVs
    • U.S.-sourced Milestar Weatherguard AS710 offers all-season value
      New Nexen Tire Garage offers dealers digital resources
      CarAdvise partnering with RepairSmith mobile repair services
      Goodyear to raise prices by up to 8% on all passenger tires on April 1
    • Pennzoil offering carbon-neutral lubricants for passenger cars
      Washington dealership uses new-school solution for recruiting auto techs
      Marinucci: Customers may ignore dangerous conditions
      Automotive Lift Institute introduces Check360 inspection, label
    • SEMA survey shows resilient auto aftermarket in 2020
      SEMA scholarships and loan forgiveness now available
      WTC hosting webinar Jan. 20 on load-capacity standards
      Denver's Brian Sump named AAPEX Shop Owner of the Year
    • SEMA survey shows resilient auto aftermarket in 2020
      Trade groups oppose minimum wage increase proposal
      New stimulus package fixes PPP loan confusion
      Vaccine may usher sense of normalcy
    • U.S.-sourced Milestar Weatherguard AS710 offers all-season value
      New Nexen Tire Garage offers dealers digital resources
      Goodyear to raise prices by up to 8% on all passenger tires on April 1
      Sentury's 10-year global expansion strategy will include plants in North America, Europe
    • Sponsored By Yokohama Tire Company
      7 questions to ask consumers when they need tires for a crossover SUV
      Sponsored By Yokohama Tire Company
      Stocking Tires for Crossover SUVs
      Sponsored By AppointmentPlus
      Three Important Lessons Learned for the Tire Business During a Pandemic
      Sponsored By Yokohama Tire Company
      7 questions to ask consumers when they need tires for a crossover SUV
  • SHOP FLOOR
    • BALANCING
    • DEMOUNTING
    • SAFETY
    • TIRE REPAIR
    • TPMS
    • TRAINING
    • VEHICLE LIFTING
    • WHEEL TORQUE
    • Video: Balancing Tire
      An introduction to wheel balancing
      Wheel weights: Balancing form with function
      Choosing the right balancing equipment
    • Video: Demounting
      Tire changer types, tips and trends
      How to clear rim rust and corrosion
      An introduction to demounting, mounting and inflation
    • Video: Safety
      Customers
      Considerations for shop safety policies
      Introduction: Creating a culture of safety
    • Video: Tire Repair
      Essential tools, materials and equipment for tire repair
      An introduction to tire repair
      How to properly patch a puncture
    • Video: TMPS Service
      The life-saving work of TPMS
      An introduction to TPMS service
      The importance of proper relearn procedures
    • Video: Training
      Internship ideas to attract tech talent
      Choosing the right auto service tech school
      Intro: Finding and training technicians
    • Video:Vehicle Lifting
      The gravity of proper lift points
      Safety essentials when using jack stands
      An introduction to lifts and lift safety
    • Video: Wheel Torque
      The importance of torque specifications
      Introduction to proper wheel installation
      Torque check and recheck recommendations
  • Multimedia
    • VIDEOS
    • PHOTOS
    • PODCASTS
  • Events
    • ASK THE EXPERT
    • LIVESTREAMS
    • WEBINARS
    • SEMA LIVESTREAMS
  • Data
    • DATA STORE
  • Resources
    • DIRECTORY
    • CLASSIFIEDS
  • ADVERTISE
  • DIGITAL EDITION
  • Awards
    • Tire Dealer Humanitarian Award
MENU
Breadcrumb
  1. Home
  2. News
May 11, 2018 02:00 AM

ATD challenges Moody's decision to downgrade its bond ratings

Tire Business Staff
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    NEW YORK — Moody's Investors Service has downgraded its ratings for American Tire Distributors Inc., but the Huntersville, N.C.-based wholesaler claims Moody's determination "does not reflect ATD's expected performance or where we actually stand financially."

    Moody's decision to downgrade ATD's ratings is based largely on an anticipated "material loss of business" resulting from Goodyear's decision to stop distributing through ATD.

    In the ratings services commentary, Inna Bodeck, Moody's lead analyst covering ATD, said, "While the value proposition afforded by ATD's extensive distribution network and replacement tire assortment remains intact, we anticipate a material loss of business that will not be easily replaced. All else being equal, the magnitude of the associated earnings and cash flow decline will compound an already levered financial risk profile, rendering a pre-emptive debt restructuring increasingly likely, in our estimation."

    ATD countered Moody's assertion, saying: "In particular, Moody's actions are based on assumptions about the Company's capital structure and have nothing to do with ATD's performance, cash flow generation or our liquidity position.

    "In fact, ATD is financially strong, and…we have a strong financial foundation and ample liquidity to continue working with our vendors and manufacturing partners as we always have.

    "Given our value proposition and service capability, we continue to receive significant support from our customers who appreciate the role ATD plays in helping them drive their success," ATD added. "We are confident that ATD will continue to win by taking care of customers, delivering products they need and supporting them in ways that no one else can."

    Moody's projects that ATD's already high debt-to-EBITDA leverage — 6.9 times over the past 12 months — will increase as the company deals with the anticipated decline in Goodyear volumes.

    Further constraining the rating are liquidity concerns related to the company's modest cash flows and increasingly constrained availability under its asset-based credit facility, Moody's said.

    The rating does continue to be tempered to some extent, Moody's said, by ATD's strong market position, the historic stability of replacement tire demand and ATD's footprint across North America.

    The specific ratings changes are:

    • Corporate Family Rating (CFR) to Caa2 from B3;
    • Probability of Default Rating to Caa3-PD from B3-PD;
    • Senior Secured Term Loan to Caa1 (LGD2) from B3 (LGD3)
    • Senior Subordinated Notes to Caa3 (LGD4) from Caa2 (LGD5).

    ATD's CFR rating of Caa2 "broadly reflects the company's very high financial leverage and narrow margins that are typical of distributors," Moody's said, adding that the loss of at least one of its key suppliers would result in a material deterioration of the company's earnings and profitability in the next 18 months.

    ATD's response reflects heavily an open letter to stakeholders it issued April 24 following Moody's initial commentary on the proposal by Goodyear and Bridgetone Americas to create a joint wholesaling venture.

    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Tire Business would love to hear from you. Email your letter to Editor Don Detore at [email protected].

    SIGN UP FOR NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Newsletter Center

    Staying current is easy with Tire Business delivered straight to your inbox.

    SUBSCRIBE TODAY

    Subscribe to Tire Business

    SUBSCRIBE
    Connect with Us
    • Facebook
    • LinkedIn
    • Twitter
    • RSS

    Our Mission

    Tire Business is an award-winning publication dedicated to providing the latest news, data and insights into the tire and automotive service industries.

    tb-logo
    Reader Services
    • Contact Us
    • About Us
    • Site Map
    • Industry Sites
    • Order Reprints
    • Customer Service: 877-320-1716
    Partner Sites
    • Rubber & Plastics News
    • European Rubber Journal
    • Automotive News
    • Plastics News
    • Plastics News China
    • Urethanes Technology
    RESOURCES
    • Advertise
    • Privacy Policy
    • Privacy Request
    • Terms of Service
    • Media Guide
    • Editorial Calendar
    • Classified Rates
    • Digital Edition
    • Careers
    • Ad Choices Ad Choices
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • OPINION
      • CORONAVIRUS
      • AUTO INDUSTRY
      • BUSINESS/FINANCIAL
      • COMMERCIAL TIRE
      • FACTORY FIXES
      • GOVERNMENT & LAW
      • INTERNATIONAL
      • MOTOR SPORTS
      • NEW PRODUCTS
      • RETAIL TIRES
      • SERVICE ZONE
      • SEMA/AAPEX
      • SMALL BUSINESS
      • TIRE MAKERS
      • SPONSORED CONTENT
    • SHOP FLOOR
      • BALANCING
      • DEMOUNTING
      • SAFETY
      • TIRE REPAIR
      • TPMS
      • TRAINING
      • VEHICLE LIFTING
      • WHEEL TORQUE
    • Multimedia
      • VIDEOS
      • PHOTOS
      • PODCASTS
    • Events
      • ASK THE EXPERT
      • LIVESTREAMS
      • WEBINARS
      • SEMA LIVESTREAMS
    • Data
      • DATA STORE
    • Resources
      • DIRECTORY
      • CLASSIFIEDS
    • ADVERTISE
    • DIGITAL EDITION
    • Awards
      • Tire Dealer Humanitarian Award