S&P rates Eimskip loans BB-, B+

Standard & Poor's said it assigned a BB- rating with a recovery rating of 1 to Eimskip Holdings Inc.'s proposed C$50 million senior secured first-lien revolving credit facility due 2012 and C$333.7 million senior secured first-lien term loan due 2012 and a B+ rating with a recovery rating of 2 to the company's proposed C$165.6 million second-lien term loan due 2012. The B long-term corporate credit rating was affirmed.

The outlook is stable.

The proceeds from the new term loans and a sale-and-lease-back transaction on 20 of Eimskip's warehouse properties will be used to refinance the company's existing financing package. Eimskip will also issue up to C$112.5 million of mezzanine debt (not rated), with a security interest in all collateral ranking junior in priority to those of the senior credit facilities.

The agency said the B corporate credit rating reflects Eimskip's very high, post-acquisition debt-to-EBITDA leverage; low coverage ratios; an intensely competitive public refrigerated warehousing and logistics business; generally short-term customer contracts; a material and increasing dependence on key global customers; and a low-margin transportation business.

These risks are partially offset by the company's participation in a global business that is relatively stable with a modest growth profile, a proven management team with a history of successfully executing and integrating acquisitions, a diverse customer base, solid real estate assets in generally good condition and a strategy of integrating storage with transportation, S&P said.

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