North American Construction Group has closed a C$200 million private placement of unsecured notes as it seeks to rejig its debt repayments after recently closing a $125 million acquisition in Australia.
S&P Global Ratings said last week it expected NACG to use proceeds from the issue to repay the outstanding balance on a revolving credit facility due May 2028.
“In our view this makes the transaction credit-neutral and we still expect the company’s leverage to be about 3.0x in 2026 and 2.7x in 2027,” S&P said.
“We could downgrade NACG within the next 12 months if we expect adjusted debt to EBITDA to remain above 3x. This could occur in the event of a prolonged downturn in commodity markets, leading to weaker demand for the company’s services, or if competitive pressures or operating disruptions contribute to lower sustained margins or less business with a key customer.
“This could also occur if the company pursues a large debt-financed acquisition or distribution.”
On the company’s most recent financial results call in March this year NACG management maintained 2026 guidance EBITDA guidance at $380-420 million and said the contractor could generate $110-130 million of free cash flow from its existing job portfolio and capital spending commitments. NACG reported 2025 EBITDA of $356.5 million on revenue of nearly $1.5 billion. About $1.2 billion of the $1.5-1.7 billion revenue forecast for 2026 was secured.
“We could revise our outlook to stable within the next 12 months if credit measures trend in line with or better than we expect, including adjusted debt to EBITDA below 3x,” S&P said.
“In this scenario the company would likely generate modest organic revenue growth, steady to improving adjusted EBITDA margins, and higher free operating cash flow to facilitate debt reduction.”
NACG’s $200 million placement of 7% senior unsecured notes, which have a mid-2031 maturity date, was underwritten by Canada’s National Bank Financial, ATB Capital Markets, Scotia Capital, TD Securities, BMO, CIBC World Markets, Canaccord Genuity and Raymond James.
The company’s acquisition of Iron Mine Contracting in Australia, combined with its 2023 purchase of MacKellar Group, established a “tier one platform in the overall Australian market”, management said.
