S&P cuts ABC Financial

S&P said it lowered its issue-level ratings on ABC Financial Intermediate LLC's first-lien credit facility to B- from B and revised the recovery rating to 3 from 2 following the company's proposed $115 million add-on.

The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate 60%) recovery in the event of a payment default.

The incremental loan will be fungible with the existing first-lien debt due 2025. The company intends to use the proceeds to repay its $115 million second-lien facility (unrated).

The B- issuer credit rating and stable outlook on ABC are unaffected.

“We view this transaction as leverage neutral with some cash flow benefits given the reduction in interest expense,” S&P said in a news release.

Moody’s cuts Mood Media, rates notes C

Moody's Investors Service said it downgraded Mood Media Borrower, LLC’s ratings, including its corporate family rating to Ca from Caa3, probability of default rating to Ca-PD from Caa3-PD, and the rating on its senior secured second-lien notes to C from Ca.

Moody's also assigned a C rating to its new proposed senior secured second-lien notes.

The outlook remains negative.

The agency said that if the proposed exchange offer and consent solicitation relating to the senior secured second-lien notes announced by Mood May 28 proceeds as outlined, it will constitute a distressed exchange, and a default under Moody's definition.

Mood is seeking to exchange its existing partial cash pay second-lien notes for new second-lien notes whose interest will only be paid-in-kind.

“The proposed exchange offer will do little to improve Mood's liquidity,” Harold Steiner, Moody's lead analyst for Mood, said in a news release.

“Performance declines are accelerating, and we expect continued pressures to negate the short-term benefits of the exchange.”

S&P trims CommScope Holding

S&P said it lowered its issuer credit rating on CommScope Holding Co. Inc. to B+ from BB- and removed the rating from CreditWatch.

At the same time, S&P lowered its issue-level ratings on CommScope's secured debt to BB- from BB and the ratings on its unsecured debt to B from B+ and removed them from CreditWatch, reflecting the one-notch downgrade of the company.

The outlook is stable.

“The downgrade reflects leverage that we expect to remain above 5x through 2020,” S&P said in a news release.

Moody’s trims Kronos

Moody's Investors Service said it downgraded Kronos Acquisition Holdings Inc.'s corporate family rating to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD, senior secured term loan B rating to B3 from B1, and affirmed the Caa2 ratings on the company's senior unsecured notes.

The outlook was changed to stable from negative.

“The downgrade reflects our expectation of continued high leverage (adjusted Debt/EBITDA around 8x) through the next 12 to 18 months as free cash flow will not provide meaningful debt repayment capacity,” Peter Adu, Moody's vice president and senior analyst, said in a news release.

S&P trims Performance Food senior notes

S&P said it lowered its issue-level rating on Performance Food Group Inc. (PFG)’s senior unsecured notes to BB- from BB and revised the recovery rating to 5 from 3 due to the increase in priority debt in the company's capital structure and an expectation for modest (10%-30%; rounded estimated: 20%) recovery for unsecured noteholders in the event of default.

Performance Food has amended, extended and upsized its asset-based revolver to $2.4 billion from $1.95 billion.

At the same time, S&P affirmed its BB issuer credit rating on PFG.

S&P also withdrew its rating on PFG's ABL facility.

The stable outlook reflects our expectation that the company will continue to generate steady profit growth across its business segments and sustain leverage around 3x while remaining somewhat acquisitive, S&P said in a news release.

S&P upgrades SeaWorld

S&P said it raised its issuer credit rating on SeaWorld Parks & Entertainment Inc. to B+ from B.

S&P also raised the issue-level rating on the company’s senior secured credit facility to B+ from B, in line with the higher issuer credit rating. The recovery rating remains 3.

The outlook is stable.

“The upgrade reflects the completion of the need to sell SeaWorld's shares by a former lender group that foreclosed on shares previously owned by a former large shareholder. It also removes the immediate risk that SeaWorld would significantly increase leverage to fund a materially larger share repurchase,” S&P said in a news release.

Moody’s lifts TPC Group

Moody's Investors Service said it upgraded TPC Group Inc.'s corporate family rating to B2 and upgraded the rating on its $805 million senior secured notes due 2020 to B2 from B3.

The upgrade reflects the significant improvement in financial performance in 2018 and improved first quarter 2019 results, the agency said.

The outlook is stable.

“TPC has demonstrated much stronger financial performance over the past four quarters due to changes to the structure of its contracts and better reliability in the operation of key production units,” John Rogers, senior vice president at Moody's and lead analyst for TPC, said in a news release.

Fitch lifts Kinder Morgan

Fitch Ratings said it upgraded Kinder Morgan, Inc. and its guarantee-providing subsidiaries long-term issuer default ratings and senior unsecured ratings to BBB from BBB- and revised the outlook to stable from positive.

Additionally, Fitch upgraded the short-term issuer default rating and commercial paper rating to F2 from F3.

“The upgrades reflect KMI's position as one of the largest and most important energy companies in the U.S., with significant positions in must-run assets that support national energy infrastructure and an expectation that KMI will manage its leverage to its self-guided 4.5x net debt/adjusted EBITDA on a sustained basis,” the agency said in a news release.

Moody’s rates Illinois Tool Works notes A2

Moody's Investors Service said it assigned an A2 rating to Illinois Tool Works Inc.'s new euro-denominated senior notes.

“The issuance does not impact other ratings of ITW, including the A2 senior unsecured or P-1 short-term ratings,” the agency said in a news release.

The outlook is stable.

“ITW's ratings reflect the company's ability to achieve superior operating performance compared to large conglomerates, which is attributable to the disciplined application of its proprietary business model and strategy execution,” Moody’s added.

Moody’s rates Covenant Surgical loans B2, Caa2

Moody's Investors Service said it affirmed the B3 corporate family rating and B3-PD probability of default rating for Covenant Surgical Partners, Inc.

Moody's also assigned a B2 (LGD3) rating to the company's new $35 million senior secured revolving credit facility and $250 million senior secured first-lien term loan.

Additionally, Moody's assigned a Caa2 (LGD5) rating to Covenant Surgical's $100 million senior secured second-lien term loan.

The outlook is stable.

Proceeds from the new credit facility, combined with $35 million of incremental equity from equity sponsor Kohlberg Kravis Roberts & Co. LP, will be used to fund acquisitions and refinance all existing debt.

“Covenant Surgical is pursuing four sizeable acquisitions in various markets. The affirmation of the B3 corporate family rating is supported by the meaningful increase in scale and market diversity resulting from the four pending acquisitions,” the agency said in a news release.

S&P rates Covenant Surgical loans B-, CCC

S&P said it affirmed its B- issuer credit rating on Covenant Surgical Partners Inc.

S&P assigned a B- issue-level rating to the proposed senior secured debt consisting of a new $35 million revolving credit facility and new $250 million first-lien term loan. The recovery rating is 3, indicating an expectation for meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a payment default.

S&P also assigned a CCC issue-level rating to the proposed $100 million second-lien term loan. The recovery rating is 6, indicating an expectation for negligible (0%-10%; rounded estimate: 0%) recovery in the event of a payment default.

The outlook is stable.

“Our rating affirmation reflects our view that Covenant revenue will grow at a faster pace than the industry average as acquisitions supplement organic growth,” S&P said in a news release.

Moody’s rates Idera second-lien loan Caa2

Moody's Investors Service said it affirmed Idera, Inc.'s B3 corporate family rating and B3-PD probability of default rating.

Concurrently, Moody's affirmed the B2 rating for the company's proposed increased first-lien term loan and revolving credit facility and assigned a Caa2 rating to the proposed second-lien term loan.

The outlook remains stable.

“These rating actions follow Idera's announced plans to return capital to its existing shareholders in conjunction with the sale of a minority stake in Idera to Partners Group,” the agency said in a news release.

“Proceeds of the increased debt portion of the financing will be used to fund a $170 million distribution, repay the existing $120 million second-lien term loan, and cover transaction related expenses, resulting in an increase in total adjusted leverage to roughly 7.0x, an increase of nearly 1.5x.”

S&P rates Imperial Dade loans B, CCC+

S&P said it assigned a B issuer credit rating to BCPE Empire Holdings Inc., which does business as Imperial Dade.

S&P also assigned a B issue-level and 3 recovery ratings to the company's first-lien facility, and assigned a CCC+ issue-level rating and 6 recovery rating to the second-lien term loan. The ABL facility is unrated.

The outlook is stable.

“Our rating on Imperial Dade reflects its relatively narrow scope of products and services, limited geographic diversification, and aggressive, acquisition-driven growth strategy. It also considers its increasing scale and relatively stable end-market demand, including somewhat nondiscretionary products and exposure to noncyclical end markets,” S&P said in a news release.

Moody’s rates Imperial Dade loans B3, Caa2

Moody's Investors Service said it assigned ratings for BCPE Empire Holdings, Inc. (Imperial Dade), including a B3 corporate family rating, B3-PD probability of default rating, a B3 rating to its senior secured first-lien term loan and delayed draw term loan, and a Caa2 rating to its senior secured second-lien term loan and delayed-draw term loan.

The outlook is stable.

Imperial Dade will use the proceeds from the debt offerings along with a $550 million cash equity contribution to finance Bain Capital's proposed acquisition of a majority stake in the company in a transaction valued at about $1.54 billion.

“Imperial Dade is well situated in the foodservice and janitorial/sanitation specialty distribution space, growing at a healthy clip both organically and through acquisitions, and the company generates strong margins for a distributor,” Brian Silver, Moody's vice president and lead analyst for the company, said in a news release.

“However, the company's ratings largely reflect its high financial leverage, which we estimate to be more than 7.5 times debt-to-EBITDA pro forma for the LBO, and our view that free cash flow generation will be suppressed, in large part from the company's substantial annual interest expense burden.”

S&P rates Jazz Acquisition loans B-, CCC

S&P said it assigned its B- issue-level rating and 4 recovery rating to Jazz Acquisition Inc.'s proposed $75 million revolving credit facility due 2024 and $405 million first-lien term loan due 2026. The 4 recovery rating indicates an expectation for average (30%-50%; rounded estimate: 45%) recovery in a default scenario.

At the same time, S&P said it assigned a CCC issue-level rating and 6 recovery rating to the company's proposed $125 million second-lien term loan due 2027. The 6 recovery rating indicates an expectation for negligible (0%-10%; rounded estimate: 0%) recovery in a default scenario.

All of S&P’s other ratings on Jazz remain unchanged.

“Our ratings on Jazz reflect its small size, the limited scope of its operations in highly competitive markets, and its weak – but improving – credit metrics,” S&P said in a news release.

“These factors are slightly offset by the company's good position in distributing bearings, seals, filters, and lighting to commercial aerospace customers and its improving customer and program diversity.”

Fitch rates MedImpact loan BB+

Fitch Ratings said it affirmed MI OpCo Holdings, Inc.'s, the issuing subsidiary of MedImpact Holdings, Inc., long-term issuer default rating at BB-. The outlook is stable.

In addition, Fitch assigned a long-term issuer default rating of BB- to MedImpact Healthcare Systems, Inc. and a BB+/RR1 rating to MI OpCo Holdings' $130 million senior secured term loan A-2.

Fitch withdrew MedImpact Holdings' long-term issuer default rating of BB-.

“MedImpact is a one of the largest pharmacy benefit managers (PBMs) based on claims processed, but is significantly smaller than its three largest competitors, Cigna Corp.'s subsidiary, Express Scripts (BBB-), CVS-Caremark, and UnitedHealth Group's subsidiary, Optum Rx (A),” the agency said in a news release.

“Size (as measured by total revenues and claims processed) is a meaningful metric in a largely consolidated industry where scale is very important.”

Moody’s rates Perforce loans B2

Moody's Investors Service said it affirmed the B3 corporate family rating and B3-PD probability of default rating of Perforce Software, Inc. in connection with the pending acquisition of a 44% equity interest in the company by funds affiliated with Francisco Partners Management LP and issuance of new debt facilities.

Moody's also assigned a B2 instrument rating to the new first-lien senior secured credit facility, which consists of a $75 million revolver and $800 million term loan.

The outlook remains stable.

New equity from Francisco Partners will fund its investment in Perforce while proceeds from the proposed new debt issuance will fund the refinancing of existing debt, redemption of $75 million of preferred equity, cash dividends to existing shareholders, and related fees/expenses.

The agency said the debt increase results in very high leverage with cash EBITDA based leverage in the mid 7x range pro forma for certain onetime costs and run rate savings, which is at the level of Moody's 7.5x downgrade trigger.

S&P rates Perforce loans B-

S&P said it affirmed its B- long-term issuer credit ratings on Perforce Intermediate Holdings LLC and its wholly owned borrowing entity, Perforce Software Inc.

At the same time, S&P assigned a B- issue-level rating and 3 recovery rating to the proposed first-lien term loan and revolving credit facility.

The outlook is stable.

“The rating action reflects our expectation that leverage will remain elevated at about 8.5x pro forma in 2019, as well as our view of the company's financial policy as aggressive due to its recent debt-funded acquisitions and continued financial sponsor ownership,” S&P said in a news release.

“However, Perforce continues to maintain good deleveraging prospects. We expect leverage to decline to just over 6.5x by the end of 2020, driven by EBITDA growth with margin improvements from cost savings and organic revenue growth in the mid-to-high single-digit percent area.”

S&P rates PGS loans B+, CCC+

S&P said it assigned a preliminary B long-term issuer credit rating to PGS ASA, a preliminary B+ issue rating to its $525 million first-lien term loan and a preliminary CCC+ rating to its $150 million second-lien term loan.

The outlook is stable.

“Our preliminary B rating on PGS reflects our view of the company's leading position in the seismic market. This is a narrow sub-segment within oilfield services, which tends to be very cyclical and requires ongoing heavy investment,” S&P said in a news release.

“The rating also takes into account PGS' relatively high debt level, which should improve in the coming years, with positive FOCF translating into improved credit metrics, including adjusted debt to EBITDA of about 3x-4x through the cycle.”

Moody’s rates Stellagroup loan B2

Moody's Investors Service said it affirmed Stellagroup's corporate family rating and probability of default rating at B2 and B2-PD, respectively.

The agency affirmed the B2 instrument rating of the €290 million senior secured term loan B and €60 million senior secured revolving credit facility.

Moody's assigned a B2 instrument rating to the €220 million senior secured term loan B to be raised to fund the acquisition of CRH's awnings and shutters business. The outlook is stable.

“The affirmation reflects both the sound strategic rationale of the acquisition, which will help Stella addressing key weaknesses identified as part of our initial rating assignment and the funding of the transaction that will be broadly leverage neutral,” the agency said in a news release.

S&P affirms Stellagroup

S&P said it affirmed its B rating on Stella's intermediate parent company Stellagroup, as well as the B issue rating, with a 3 recovery rating, on the senior secured notes, including the proposed add-on.

The outlook is stable.

In April, Stellagroup announced that it would acquire CRH's Shutters & Awnings (S&A) operations, a leading manufacturer of shutters, awnings and garage doors in Western Europe. Stella is raising a €220 million term loan add-on as part of the acquisition, with its current shareholders also contributing through an equity injection.

“We believe the S&A acquisition will enable Stellagroup to enlarge its footprint in Western Europe, and gain size and scope, and note that the group's capital structure will remain highly leveraged,” S&P said in a news release.

S&P revises Permian Production view to negative

S&P said it revised its outlook on Permian Production Partners LLC to negative from stable and affirmed the B- issuer credit rating.

At the same time, S&P affirmed the B+ issue-level rating on Permian Production Partners' senior secured term loan due 2024. The 1 recovery rating remains unchanged, indicating an expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of a payment default.

“The negative outlook reflects the potential that we will lower our ratings on the company if it is unable to reverse the production declines and increase its cash flows to improve the coverage of its capital spending and debt amortization,” S&P said in a news release.

Moody’s changes Hema view

Moody's Investors Service said it affirmed the B3 corporate family rating and B3-PD probability of default rating on Hema BV.

Moody's affirmed the B2 instrument rating of the €600 million senior secured floating-rate notes due 2022 issued by Hema Bondco I BV and the Caa2 rating to the €150 million senior unsecured notes due 2023 issued by Hema Bondco II BV.

The agency changed the outlook to negative from stable.

“Today's change in outlook to negative reflects Hema's deteriorating operational performance and negative free cash flow generation in FY 2018 and our expectation of continued challenging trading conditions in the next 12 to 18 months owing to intense competition, slow economic growth and high cost inflation which will keep pressure on Hema's earnings and cash flows in the coming quarters,” Francesco Bozzano, Moody's assistant vice president, analyst and lead analyst, said in a news release.

Fitch affirms A&O

Fitch Ratings said it affirmed Alpha Group's (A&O) long-term issuer default rating at B with stable outlook and the senior secured debt rating at BB-/RR2/89%.

A&O's rating and stable outlook encapsulate a deleveraging path based on our expectation of improving free cash flow generation by 2021, the agency said.

The rating is constrained by the limited scale of the operations, aggressive LBO-style leverage, increased execution risks as A&O is expanding outside Germany, and higher capex required to renovate its existing properties and extend its brand to the ultra-low-cost hotel market, Fitch said.

S&P affirms CVR Refining

S&P said it affirmed its BB- long-term issuer credit rating on CVR Refining LP (CVRR).

At the same time, S&P affirmed its BB- issue-level rating on the partnership's senior unsecured notes.

The outlook is stable.

“The affirmation reflects our belief that CVR Refining's financial performance will remain strong on its steady crack spreads and high refining margins as well as a substantial reduction in its spending on RINs to comply with the renewable fuel standard. Overall, we forecast that the company's S&P Global-adjusted debt to EBTIDA will be in the 1x area,” S&P said in a news release.

“Our ratings on CVR Refining continue to be limited by our view of its parent's (CVR Energy) credit quality.”

Fitch affirms MGM

Fitch Ratings said it affirmed the long-term issuer default ratings of MGM Resorts International, MGM China Holdings, Ltd. and MGM Grand Paradise, SA at BB.

The outlook is stable for all entities.

“The affirmation reflects MGM's improving credit profile as the company diversifies itself away from the Las Vegas Strip through greenfield development and acquisition growth initiatives,” the agency said in a news release.

“The company's development pipeline is largely complete, boosting the company's discretionary FCF profile.”

Moody’s affirms Tortoise Borrower

Moody's Investors Service said it affirmed the Ba2 corporate family rating and senior secured debt rating of Tortoise Borrower, LLC following the company's announcement that it will acquire the energy infrastructure and MLP investment business of Advisory Research, Inc., a subsidiary of Piper Jaffray.

Moody's also affirmed the company's Ba2-PD probability of default rating.

The outlook remains stable.

“The affirmation reflects the acquisition's modest impact on Tortoise's business and financial profiles,” the agency said in a news release.

“The addition of Advisory Research's energy infrastructure and MLP business provides modest scale and diversification benefits. We also expect the acquisition to put little strain on Tortoise's leverage profile because more than half the purchase price will be funded with cash and additional owner equity contributions.”

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