Credit rating agency S&P Global upgraded lead battery recycler Gopher Resource’s credit rating to B- from CCC after the US company successfully refinanced its outstanding debt.
New credit of $450 million has been secured and falls due in 2029. S&P noted first-half operating results increased, with a 45% rise in EBITDA from the first half of 2023. S&P withdrew its CCC issue-level rating and 3 recovery rating on the senior secured debt, which was repaid. This eliminates near-term refinancing concerns, it said.
“We expect improved operating results after implementing stabilisation initiatives the past few quarters. Two to three years ago, Gopher was unable to sustain annual production of about 300,000 tons due to a series of challenges at its production facilities. These challenges included labour availability, frequent equipment breakdowns and disruptions from extreme weather,” said S&P on 18 October.
It has addressed that with repair work and new equipment installation, it said. Both facilities are almost fully staffed. IT and other investments have improved uptime reliability.
“Gopher remains well positioned to benefit from a tight refined lead battery recycling market,” said S&P. It noted supportive end-market demand and the stabilisation of operations – which positions the company to maintain its position as one of the top three battery recyclers in the US.
The majority of the company’s volumes are contracted, which provides good revenue visibility and stability, it said. But the company is exposed to high customer concentration, with two customers accounting for more than 70% of volumes. These relationships are long tenured and sticky due to high switching costs for customers and limited battery recycling capacity, it added.
The refinancing was led by a consortium of new and existing lenders including lead lender Silver Point Finance. Gopher said the proceeds of the refinancing, along with additional equity investment from Energy Capital Partners, provides it with “significant runway” to capitalise on ongoing operational initiatives to drive long-term growth.
John Graham, CEO of Gopher Resource, said the refinancing fully addresses its debt maturities and further strengthens the company’s financial position.
Photo: lead casting line. Gopher
