S&P rates QualTek, loan CCC+, loans CCC-

S&P said it gave CCC+ ratings to QualTek LLC and its first-lien term loan following the company’s emergence from bankruptcy. The agency also assigned CCC- ratings to the company’s second- and third-lien term loans. The recovery rating on the first-lien loan is 3 (rounded estimate: 50%) and 6 (rounded estimate: 0%) on the second- and third-lien loans. The outlook is stable.

“The upgrade reflects QualTek's lower debt burden out of bankruptcy and our expectation for a gradual recovery in operating performance. The company's post-emergence capital structure consists of a $101 million asset-based lending (ABL) facility, a $135 million first-lien term loan, a $105 million second-lien term loan, and a $0.128 million third-lien term loan. Its S&P Global Ratings-adjusted debt (including leases) dropped to approximately $415 million from $663 million as of April 2023,” S&P said in statement.

S&P said it forecasts that QualTek will generate about $700 million in revenue in 2024-2025, with an S&P Global Ratings-adjusted EBITDA margin of about 10%.

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