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S&P assigns CPI facilities B, CCC+
S&P said it affirmed the B corporate credit rating on CPI International Inc.
The outlook remains stable.
At the same time, the agency assigned a B issue-level rating and 4 recovery rating to the company's new $35 million revolving credit facility and $450 million first-lien term loan. The 4 recovery rating indicates an expectation for average (30%-50%; rounded estimate: 45%) recovery in the event of a payment default.
Additionally, S&P assigned a CCC+ issue-level rating and 6 recovery rating to CPI's $120 million second-lien term loan. The 6 recovery rating indicates an expectation for negligible (0%-10%; rounded estimate: 5%) recovery in the event of a payment default.
CPI is being acquired by Odyssey Investment Partners LLC and the company plans to fund the acquisition with equity and new secured bank debt, which will modestly increase its leverage.
S&P said the stable outlook reflects that, although the company's leverage will increase due to the proposed transaction, the agency expect its credit metrics to improve over the next 12 months on higher revenue and earnings from an increasing volume of defense and commercial orders.
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