S&P rates ConvergeOne loans B, CCC+

Standard & Poor's said it assigned its B corporate credit rating to C1 Investment Corp. (ConvergeOne).

The outlook is stable.

At the same time, the agency assigned a B issue rating with a recovery rating of 3 to ConvergeOne Holdings Corp.'s $25 million revolving credit facility (unfunded at closing) and $190 million first-lien term loan and a CCC+ issue rating with a recovery rating of 6 to the company's $80 million second-lien term loan. The recovery rating of 3 indicates an expectation for a meaningful (50% to 70%) recovery of principal in the event of payment default and the recovery rating of 6 indicates an expectation for negligible (0% to 10%) recovery of principal in the event of payment default.

S&P said its ratings on ConvergeOne reflect the company's operations in a highly fragmented and competitive market and its significant reliance on distribution of Avaya communication products, which result in the view of its business risk profile as "weak."

Growth in the company's markets, its diverse customer base, mix shift to recurring service revenues, and steady free cash flow generation are positive factors. The agency assesses its financial risk profile as "highly leveraged."

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