S&P snips Agiliti

S&P said it lowered its ratings on Agiliti Inc. and its revolver and first-lien term loan to B from B+. The agency also removed all the ratings from negative watch where they were placed on Feb. 26. The outlook is now stable.

Thomas H. Lee plans to take Agiliti private by buying the shares it does not already own. To fund the deal, the company will borrow an incremental $300 million first-lien term loan and draw down most of its $150 million accounts receivable securitization facility.

“The downgrade reflects our expectation for high leverage, weaker cash flow generation, and a more aggressive financial policy following the take-private transaction,” the agency said in a press release.

“Pro forma for the transaction, we expect S&P Global Ratings-adjusted leverage will be elevated at around 5.3x in 2024. The incremental debt will also contribute to weaker cash flow due to higher interest expense. For 2024, we project slightly positive FOCF, which includes transaction-related costs. Excluding these one-time costs, we expect FOCF generation of about $30 million in 2024, implying an adjusted FOCF to debt ratio above 3%,” S&P said.

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