S&P rates Indicor, loan B

S&P said it gave B ratings to Indicor LLC and its planned first-lien $1.537 billion term loan due 2029 and $300 million revolver due 2027. The recovery rating on the loans is 3 (60%). The outlook is stable.

Clayton Dubilier & Rice acquired a majority stake in Indicor, the former industrial products business of Roper Technologies Inc. Roper will keep a minority stake in the company.

The financing includes the term loan, $65 million from the revolver and an unrated $475 million second-lien term loan due 2030.

“Elevated backlog, favorable demand dynamics, and a relatively resilient margin profile should provide countermeasures against a looming recession. For the period ended Sept. 30, 2022, Indicor generated last- 12-month (LTM) sales growth of close to 13% as a result of strong order volumes and price realization across all of its businesses. The company also improved its operating margins, with its fixed costs leverage providing a benefit to offset weaker gross margins from rapidly rising costs and supply chain disruptions during the first half of the year,” the agency said in a statement.

“In our view, the company will generate positive FOCF and maintain adequate liquidity and covenant headroom for the next 12 months. We expect the company will generate FOCF of about $200 million in 2022 driven by strong earnings from operations and relatively low capital requirements,” S&P noted.

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