S&P rates NorthStar, loan B

S&P said it assigned B ratings to NorthStar Group Services Inc. and its planned $555 million senior secured term loan due 2027. The recovery rating is 3. NorthStar also plans to secure a $100 million asset-based revolving credit facility due 2025. The revolver won’t be rated.

NorthStar will use the proceeds to fund a dividend distribution and refinance its capital structure.

“Debt leverage appears manageable. Pro forma for the transaction, we estimate that NorthStar’s adjusted debt-to-EBITDA ratio will slightly exceed 4x, which we see as relatively manageable given the company’s operational scale, service offering, and overall operational risk profile,” S&P said in a press release.

The outlook is stable. “The stable outlook on NorthStar reflects our belief that its backlog and economic conditions will support earnings growth over the next 12 months, such that adjusted debt leverage remains well below 6.5x or EBITDA interest coverage remains well above 1.5x while liquidity remains adequate,” the agency said.

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