S&P lowers McGraw-Hill loan

Standard & Poor’s said it downgraded the rating on McGraw-Hill Global Education Holdings LLC’s proposed senior secured credit facility to B+ from BB- and lowered the recovery rating to 2 from 1, indicating 70% to 90% expected default recovery.

The downgrades follow the company’s plan to upsize its term loan to $1.575 billion from $1.305 billion and downsize its proposed senior unsecured notes to $400 million from $670 million, S&P said.

The revision to the senior secured credit facility ratings reflects the higher estimate of first-lien debt and lower recovery prospects for senior secured credit facility lenders under the simulated default scenario, the agency said.

All of the other ratings, including its B corporate credit rating, is unchanged.

The new debt refinancing now consists of a proposed $1.925 billion senior secured credit facility, which includes a $350 million revolving credit facility due 2021, $1.575 billion first-lien term loan due 2022 and proposed $400 million senior notes due 2024.

The proceeds and about $90 million in cash will be used to refinance existing debt issued at McGraw-Hill and McGraw-Hill School Education Holdings LLC, S&P said, and fund a $300 million dividend.

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