S&P gives Arclin loan B

S&P said it gave its B rating and 3 recovery rating to LSF 10 Cedar Investments LP's (Arclin) planned $692 million first-lien senior secured term loan due 2026. The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate: 50%) recovery in default. All of S&P’s other ratings on the company remain unchanged.

Arclin said it plans to use the proceeds from the $160 million add-on to its first-lien term loan, along with $44 million of cash, to pay a $115 million special dividend to its shareholders and retire its $85 million second-lien term loan. Following the transaction, the company's S&P Global Ratings-adjusted debt will increase by about $75 million.

“However, we expect Arclin's leverage will remain in the 5x-6x range in 2021, albeit closer to the higher end of the range. We view this level of leverage as being commensurate with our current rating,” the agency said in a press release.

“It is our understanding that the company will replace its current $532 million (outstanding) first-lien term loan with the new tranche of senior secured debt and the $160 million first-lien add-on, which will leave it with a total unadjusted debt balance of $692 million. Upon the close of the transaction, we will discontinue our ratings on Arclin's current $532 million senior secured first-lien tranche and our ratings on its outstanding second-lien term loan,” S&P said.

New Arclin U.S. Holding Corp. is the borrower of the company's current outstanding first-lien and second-lien term loans and will remain the borrower of the company's new secured tranche.

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