S&P rates Mavis, loans B-, notes CCC

S&P said it assigned B- ratings to Mavis Tire Express Services Topco LP and its planned first-lien credit facilities. The facilties’ recovery rating is 3 (50%-70%; rounded estimate: 50%). The facilities will include a $200 million revolver and a $1.9 billion term loan.

The agency also rated Mavis’ proposed $720 million of senior unsecured notes CCC with a 6 recovery rating (0%-10%; rounded estimate: 0%).

A private equity group plans to buy a majority ownership stake in Mavis.

“We estimate Mavis' S&P Global Ratings' adjusted leverage (including preferred equity) will exceed 11x in 2021 following the planned acquisition. The proposed financing includes a $1.9 billion first-lien term loan, $720 million in unsecured notes and around $500 million in preferred equity, along with common equity. Following meaningful growth in 2020, including the 37% increase in adjusted EBITDA, we expect EBITDA expansion will continue and the company's low-cost capital spending model will support FOCF generation over the next 12-18 months,” the agency said in a press release.

S&P said it expects adjusted leverage to trend towards 10x in 2022.

The outlook is stable.

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