S&P rates Alliant loan B-, notes CCC

Standard & Poor's said it assigned a B- long-term counterparty credit rating to Alliant Holdings I LLC following the announced leveraged buyout of the company by private-equity firm Kohlberg Kravis Roberts.

All of the debt related to the transaction is to be issued by Alliant LLC. Alliant Inc. is the current issuer of existing debt.

The outlook is stable.

The agency said it revised the outlook on Alliant Holdings I Inc. to stable from positive, reflecting the higher prospective debt level following the restructuring.

S&P said it expects to withdraw all of the ratings on Alliant following the close of the transaction.

The agency said it assigned a preliminary B- debt and 3 recovery ratings to Alliant LLC's proposed senior secured facilities consisting of a $705 million term loan B due 2019 and $100 million revolving credit facility due 2017, indicating 50% to 70% expected default recovery.

S&P also said it assigned a preliminary CCC debt and 6 recovery ratings to the company's proposed $450 million senior unsecured notes due 2020, indicating 0% to 10% expected recovery in a default.

The ratings are in response to a belief that the company's credit metrics will deteriorate following the proposed recapitalization, the agency said.

The new capital structure will result in a higher debt level of $1.155 billion immediately following the transaction, compared with $823 million as of Sept. 30, S&P said.

The stable outlook reflects a view that the company will be able to de-lever at a measured pace during the next few years because of strong revenue and earnings growth, the agency said.

The ratings are based on the company's limited financial flexibility arising from a highly leveraged capital structure, weak EBITDA fixed-charge coverage metrics, revenues and earnings volatility in certain programs and a low-quality balance sheet with negative tangible net worth, S&P said.

Somewhat offsetting these weaknesses is an experienced management team that focuses on maintaining Alliant LLC's enhanced competitive position through strategic acquisitions, the hiring of seasoned producers and strong organic revenue growth, the agency said.

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