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S&P boost s KAR secured rating
S&P said it upgraded KAR Auction Services Inc.’s senior secured rating to BB- from B and the recovery rating to 1 from 3, indicating very high recovery (90%-100%; rounded estimate: 95%).
KAR sold its ADESA U.S. physical auction business to Carvana Co. and used a portion of the $1.65 billion in net proceeds to cut senior secured debt, including the $926.2 million term loan and its $101 million revolver balance. KAR put the rest on the balance sheet.
“The net debt reduction was substantial, but pro forma for the sale of the physical auction business, we expect debt to EBITDA will exceed 9x in 2022,” S&P said in a press release.
The agency affirmed KAR’s B issuer rating and the B- rating on its senior unsecured notes rating but raised the rounded recovery estimate within the modest band to 20% from 10%. Additionally, S&P removed the ratings from CreditWatch where they had been placed with positive implications on March 2.
The outlook is stable.
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