Apex Tool Group LLC was downgraded Nov. 18 by Moody's to Caa2 and a negative outlook, from Caa1 and a stable outlook, with the agency citing the company's "untenable" capital structure for the downgrade. The company's first-lien term loan due 2024 (L+550, 1.25% floor) and revolver were both also downgraded, to Caa1 from B3, while a $325 million tranche of 9% unsecured bonds due 2023 was affirmed at Caa3.

Moody's said that the company's "inability to generate a material amount of earnings" has resulted in leverage it projects will hold above 8.5x through 2022. Moody's also noted a "maturing debt profile," specifically a November 2022 springing maturity on its bank debt (making it a current liability), followed by the maturity of the senior notes in February 2023.

The rating agency labeled the company's liquidity "weak," noting that Apex faces roughly $120 million in upcoming fixed charges with a nearly fully drawn revolver. Moody's said the company's "financial situation is unsustainable," adding that "a debt restructuring will be needed, bringing the company's capital structure more in-line with current operating performance."

Sparks, Md.-based Apex Tool Group is a global manufacturer of hand and power tools for industrial, commercial and retail customers. It is owned by Bain Capital Partners LLC.