S&P rates Hi-Crush notes B-

S&P said it assigned its B- issue-level rating and 3 recovery rating to Hi-Crush Partners LP's proposed $450 million senior unsecured notes due 2026. The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate: 50%) recovery in the event of a payment default.

S&P said it expects the company to use proceeds (along with a $15 million equity issuance) to prepay its existing $200 million first-lien term loan due 2024 and fund the $60 million acquisition of FB Industries. The bulk of the remaining $206 million would be applied to the balance sheet for general corporate purposes, including funding expansion efforts at its Wyeville and Kermit facilities.

The company is also replacing its existing undrawn $125 million senior secured cash flow revolving credit facility due 2022 (unrated) with a $200 million asset-backed revolver due 2023 (unrated), S&P noted.

The issuer credit rating is unchanged at B- with a positive outlook.

“We expect the acquisition of FB Industries to enhance Hi-Crush's logistics and delivery platform. However, our view of the company's competitive position remains unaffected at this time,” S&P said in a news release.

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