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S&P rates Heckmann add-on B, may lift notes
Standard & Poor's said it affirmed the B+ corporate credit rating on Heckmann Corp. and removed the rating from CreditWatch, where it was placed with developing implications in September.
The agency also said it placed the B- rating on the company's existing senior unsecured notes on CreditWatch with positive implications.
If the company's proposed acquisition of Badlands Power Fuels LLC, which does business as Power Fuels, is consummated as currently structured, the agency said it will raise the rating on this debt to B and revise the recovery rating to 5 from 6.
S&P also said it assigned a B rating and 5 recovery rating to the proposed $150 million add-on offering of senior unsecured notes.
The proposed $150 million add-on offering will be issued under Rough Rider Escrow Inc., a wholly owned unrestricted subsidiary of Heckmann.
Upon consummation of the Power Fuels acquisition, Heckmann will assume the obligations of Rough Rider Escrow and become the issuer of the notes through a mandatory redemption, S&P said. The notes will constitute an additional issuance of Heckmann's existing 9 7/8% senior notes due 2018 and will be governed by the existing April 10, 2012 indenture.
The proceeds from the add-on notes, along with capital contributions from Heckmann, will be placed into an escrow account as security. The acquisition is expected to be completed before the end of this year and if it doesn't, the issuer will be required to redeem the notes at a stated redemption price.
The affirmations reflect a view that Heckmann's credit quality will remain stable following the proposed acquisition, said James T. Siahaan, an S&P analyst.
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