S&P rates Dealertrack loan BB-

Standard & Poor's said it assigned a preliminary B+ corporate credit rating to Dealertrack Technologies Inc.

The agency also said it assigned a preliminary BB- rating with a preliminary recovery rating of 2 to the company's $200 million revolving credit facility and $575 million first-lien term loan. The preliminary 2 recovery rating indicates 70% to 90% expected default recovery.

The outlook is stable.

The company is using the loan proceeds, together with $397 million of equity and about $70 million of cash, to fund the $1 billion purchase of Dealer.com, S&P said.

The ratings reflect Dealertrack's weak business risk profile and aggressive financial risk profile, incorporating a relatively narrow and cyclical end market, coupled with the significant relative size of the acquisition and expected leverage of above 4x over the intermediate term, said Katarzyna Nolan, an S&P analyst.

High revenue growth rate, diversified customer base and stable operating cash flow generation are partial offsets, Nolan said in a press release.

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