S&P rates Alorica loans CCC+

S&P said it assigned its CCC+ issue-level and 1 recovery ratings to Alorica Inc.'s new $85 million delayed-draw term loan and $83 million term loan due in October 2020.

“We also lowered our issue-level ratings on the existing senior secured revolving credit facility and term loans to CCC- from CCC and revised our recovery ratings on the debt to 3 from 2. We are placing the two new issue-level ratings on CreditWatch with negative implications, in-line with the existing issuer credit rating. All of the other ratings remain on CreditWatch with negative implications, where we initially placed them on Oct. 14, 2019,” S&P said in a press release.

The 1 recovery ratings on the new priority term loans reflect an expectation for very high (90%-100%; rounded estimate: 95%) recovery in a simulated default scenario.

Alorica used the proceeds to repay a like amount of debt under its senior secured credit facilities. “We expect Alorica to use the remaining availability under the delayed-draw term loan for ongoing liquidity needs as it navigates business disruptions stemming from the Covid-19 pandemic,” said S&P in a press release.

The 3 recovery rating on the now subordinated existing senior secured credit facility reflects an expectation for meaningful (50%-70%; rounded estimate: 60%) recovery in a simulated default scenario. “The lowering of the issue-level rating reflects the subordination of the existing credit facility following the new issuance, effectively resulting in its claims on the borrower and guarantor's assets becoming second-lien,” S&P said.

Also, the new term loans satisfy the requirements from the April 15, amendment to the company's credit agreement to extend the deadline for a $100 million prepayment to July 10 from April 22, as well as to waive the financial maintenance covenants requirements for the periods ending March 31 and June 30.

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