Rating Action: Moody's downgrades Tiger Acquisition, LLC's CFR to B3 from B2; outlook is stableGlobal Credit Research - 01 Sep 2022New York, September 01, 2022 -- Moody's Investors Service ("Moody's") downgraded the ratings of Tiger Acquisition, LLC (dba "Sabre Industries, Inc.", "Sabre") including the Corporate Family Rating (CFR) and Probability of Default Rating (PDR) to B3 and B3-PD, respectively from B2 and B2-PD. Concurrently, Moody's downgraded Sabre's first lien senior secured bank credit facility ratings to B2 from B1. The ratings outlook is stable.The ratings downgrade is driven by continued macroeconomic-related supply chain and inflationary cost pressures. Due to the aforementioned, although Moody's expects credit metric improvement over the next 12 to 18 months, leverage will remain above the levels expected for the B2 rating. Additionally, rising interest rates will consume incremental cash flow which will constrain debt repayment and meaningful deleveraging, despite the company having some hedging instruments in place.The following rating actions were taken:Downgrades:..Issuer: Tiger Acquisition, LLC.... Corporate Family Rating, Downgraded to B3 from B2.... Probability of Default Rating, Downgraded to B3-PD from B2-PD.... Senior Secured 1st Lien Term Loan, Downgraded to B2 (LGD3) from B1 (LGD3).... Senior Secured 1st Lien Revolving Credit Facility, Downgraded to B2 (LGD3) from B1 (LGD3)Outlook Actions:..Issuer: Tiger Acquisition, LLC.... Outlook, Remains StableRATINGS RATIONALESabre's B3 Corporate Family Rating (CFR) reflects its very high leverage and moderate revenue scale. The B3 CFR also incorporates Sabre's vulnerability to capex and infrastructure spending cycles in the telecom business (less than 25% of revenue), which can be volatile. Further, Sabre's work is contract based, so the company must consistently replace maturing contracts with new ones in order to avoid meaningful swings in operating performance. However, Moody's notes that the contracts are multi-year and that the company has a solid track record of contract renewal and strong backlog of existing orders. The company is also geographically concentrated in the US.These risks are balanced against Sabre's leading market positions and high revenue visibility. The company is a leader in providing engineered structures to the telecom and utilities industries and has long-term strategic relationships with key customers. Long-term favorable dynamics underlying the company's utility and telecom businesses will continue to drive positive demand over the next 12-18 months. These dynamics include strong spending by utilities customers to support "grid hardening", or the upgrading and strengthening of their infrastructure, particularly in light of increasing incidence of extreme weather events. Telecommunications customers also continue to invest in their infrastructure to enhance their networks reliability and connectivity.The stable outlook is based on Moody's expectation that supply chain challenges and labor shortages will ease in the next 12-18 months, allowing for a partial recovery in earnings and cash flow versus FY22.Sabre's adequate liquidity is supported by Moody's expectation that the company's free cash flow will be positive in fiscal 2023 and improve thereafter. The company also has an undrawn $125 million revolving credit facility and no near-term debt maturities. Moody's notes that the company utilizes a $125 million securitization facility maturing in 2025 with $85 million drawn under the facility. The company's term loan does not have financial maintenance covenants. However, the revolving credit facility has a springing covenant when more than 40% of the facility is drawn. Currently, if tested, the company would be in compliance with the covenant.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSA weakening of the company's liquidity or failure to meaningfully improve margins and free cash flow versus recent quarters could lead to a downgrade of the ratings. A more aggressive financial policy, including any actions that would further increase financial leverage such as a dividend, would also exert downward ratings pressure.Healthy organic revenue and earnings growth accompanied by meaningful debt reduction such that debt/EBITDA improves to the 5.5 times level could support an upgrade. The ratings could also be upgraded if Sabre meaningfully improves liquidity and demonstrates reduced quarterly earnings and cash flow variability.Headquartered in Alvarado, Texas, Sabre Industries, Inc. manufactures towers, poles, equipment enclosures and related transmission structures used in the wireless communications and electric transmission and distribution industries. The company is owned by Blackstone.The principal methodology used in these ratings was Manufacturing published in September 2021 and available at https://ratings.moodys.com/api/rmc-documents/74970. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. 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