Credit ratings agency S&P Global Ratings said it placed battery manufacturer C&D Technologies’ B rating on credit watch due to its refinancing risk as company loans near maturity.
S&P noted in a ratings statement on 22 August that C&D has received its first cash inflow from the Inflation Reduction Act’s (IRA’s) section 45X Manufacturing Production Tax Credit. The credits cover a range of energy generation and storage products that are required to be produced domestically.
This should improve the company’s S&P ratings credit metrics, including its leverage and free operating cash flow (FOCF) up to and including 2032, it said.
S&P particularly noted C&D’s $400 million first-lien term loan. It falls due in December 2025. It also has a $100 million subscription facility due on 13 December 2025. “Therefore, we placed all of our ratings on C&D Technologies, including our ‘B-‘ issuer credit rating and term loan issue-level rating, on CreditWatch with developing implications,” it said.
It means S&P could lower its ratings over the next few months if the company does not successfully address its upcoming debt maturities. It could also raise the ratings if C&D does refinance its term loan and alleviate refinancing risk.
C&D has a strong order pipeline that could exceed $50 million by the end of 2024, S&P said. It believes the company can scale the business relatively quickly over the next 12–24 months. However, the costs of that are large and this product offering will likely operate at a loss until 2026, it said.
S&P views the company’s efforts in building its lithium-ion battery business as “modestly positive”. But C&D Technologies remains heavily exposed to the processing of lead-acid batteries, it added. “Although lead-acid batteries are recyclable, this process can result in lead contamination if not disposed of appropriately. The potential for lead contamination creates both reputational and financial risk for the industry as a whole,” it said.
On 14 August, the New York State Department of Environmental Conservation interim commissioner Sean Mahar announced a $7 million settlement with electronics company Avnet for costs associated with cleaning up the C&D Power Systems (C&D Batteries) State Superfund Site.
