S&P gives Marlink, loan B

S&P said it gave preliminary B ratings to Venga Holdings (Marlink) and its planned $815 million, seven-year term loan. Subsidiary Venga Finance Sarl will be the borrower on the floating-rate loan. The loan’s preliminary recovery rating is 3 (55%). The company also plans to secure a 6.5-year revolving credit facility.

“The rating is constrained by Marlink's high S&P Global Ratings-adjusted leverage, leveraged buyout ownership, and highly competitive niche market. We forecast S&P Global Ratings-adjusted debt to EBITDA at 6.4x in 2021 (6.9x excluding our incremental lease adjustment for satellite capacity commitments). In our view, the company's private-equity ownership will foster an aggressive capital structure,” the agency said in a press release.

Marlink plans to use the term loan proceeds to refinance its debt structure and fund Apax Partners and management's sale of a majority stake to Providence Equity Partners.

The outlook is stable. The agency said it expects favorable growth drivers and the company's well established leading very small aperture terminal position, low churn and seasoned management will support steady organic revenue growth of 4%-6% in 2022-2023, expanding margins, positive free operating cash flow and fully adjusted debt to EBITDA retreating to about 5.7x in 2022 from 6.4x at Dec. 31, 2021.

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