S&P: Gates Global unchanged after add-on

S&P said all of the issue ratings on Gates Global LLC are unchanged following news of the company's incremental term loan and $150 million add-on bond offering.

The company’s B+ rating and 3 recovery rating on the company's first-lien secured debt are unchanged.

The 3 recovery rating indicates 50% to 70% expected default recovery.

The B rating and 5 recovery rating on Gates Global's senior unsecured notes also are unchanged. The 5 recovery rating indicates 10% to 30% expected default recovery.

S&P also said it assigned a B+ rating and 3 recovery rating to the company's €285 million incremental term loan.

The 3 recovery rating indicates 50% to 70% expected default recovery.

Gates is planning to issue $450 million of new capital, which is comprised of a $300 million euro-equivalent incremental term loan and $150 million add-on to its existing senior unsecured notes.

The company is expected to use the proceeds from this new capital to partially repay its existing dollar-denominated term loan, which had roughly $2.4 billion outstanding as of Dec. 31, 2016, S&P said.

The transaction also contemplates the extension of the maturity dates on both of the company’s first-lien term loans to March 2024 from July 2021, a three-year extension of the maturity date on its existing asset-based lending facility to July 3, 2022, and the re-pricing of its euro-denominated term loan, the agency said.

This transaction is expected to be leverage neutral for Gates, S&P said.

The company will continue to sustain its competitive advantages and reduce its leverage toward 6.5x in the next 12 months, the agency said.

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