S&P nicks New Era Cap

S&P said it lowered its issuer rating for New Era Cap LLC to B from B+ and the rating on the first-lien term loan due 2027 to B+ from BB-; the 2 recovery rating is unchanged, reflecting substantial recovery (70%-90%, rounded estimate: 75%) in default.

The downgrade follows private equity firm ACON Investments boosting its ownership in New Era through a non-common equity transaction, S&P said. The agency counts the non-common equity units as debt in its debt calculation, which boosted the company’s leverage to about 8x for the 12 months through June 2022 compared to the mid-1x area when the non-common equity is excluded.

“While the CEO and company leadership maintain control, we believe this increase in ACON's ownership enables it to be highly influential in the decision-making regarding the company's financial policy and governance, for these reasons, S&P now view New Era as a sponsor-owned and controlled entity,” S&P said in a press release.

The outlook is stable.

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