S&P gives Kenan Advantage loans BB, notes B-

Standard & Poor's said it affirmed its B+ corporate credit rating on Kenan Advantage Group Inc. and revised the outlook to stable from negative.

At the same time, the agency assigned its BB issue-level rating and 1 recovery rating to Kenan's proposed senior secured credit facilities. The senior secured credit facilities consist of a revolver (composed of a $110 million tranche and C$15 million tranche), a $750 million term loan B and a $150 million delayed-draw term loan. The 1 recovery rating indicates an expectation for very high recovery (90%-100%) in the event of a default.

Additionally, S&P assigned its B- issue-level rating and 6 recovery rating to the company’s $405 million senior unsecured note issuance. The 6 recovery rating indicates an expectation for negligible recovery (0-10%) in the event of a default.

"The outlook revision reflects our expectation that Kenan Advantage will maintain its debt-to-EBITDA metric below 6x for a sustained period," S&P credit analyst Michael Durand said in a news release.

Over the next year, the agency continues to expect that stable demand for petroleum products and bolt-on accretive acquisitions will improve Kenan Advantage's credit metrics. Pro forma for the transaction, the company's funds from operations (FFO)-to-total debt ratio is modestly above 10% and its debt-to-EBITDA metric is in the high-5 times area.

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