S&P rates Commercial Barge loans B+, CCC+

Standard & Poor’s said it raised the corporate credit rating on Commercial Barge Line Co. to B from B-.

The agency also said it raised the corporate credit rating on the company’s parent company, American Commercial Lines Inc., to B from B- and withdrew the rating on this entity at the company’s request.

S&P also said it assigned a B+ rating and 2 recovery rating on Commercial Barge’s $1.1 billion senior secured term loan B. The 2 recovery rating on the term loan indicates 70% to 90% expected default recovery.

The agency also said it assigned a CCC+ rating and 6 recovery rating to the company’s $200 million senior secured term loan C. The 6 recovery rating indicates 0 to 10% expected default recovery.

The outlook is stable.

The upgrades reflect a belief that Commercial Barge will be able to sustain its improved credit metrics despite the company’s debt-financed acquisition of AEP River Operations LLC, S&P said.

Commercial Barge’s proposed financing for the transaction will comprise a $550 million asset-based lending revolving credit facility due 2020, $1.1 billion senior secured term loan B due 2022, $200 million senior secured term loan C due 2023 and the assumption of capital leases, the agency said.

Following the completion of this acquisition, S&P said it expects the company to generate about $175 million of free operating cash flow annually and maintain an adjusted debt-to-EBITDA ratio of about 4.5x.

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