S&P rates Michael Baker loan B+

S&P said it affirmed the B+ corporate credit rating on Michael Baker International LLC.

The agency also said it assigned a B+ rating and 3 recovery rating to the company's proposed $450 million term loan B. The 3 recovery rating indicates 50% to 70% expected default recovery.

The B- rating and 6 recovery rating on the company's 8 7/8% payment-in-kind toggle notes due 2019 issued by parent company Michael Baker Holdings LLC are unchanged. The 6 recovery rating indicates 0 to 10% expected default recovery.

The outlook is stable.

The proceeds from the proposed term loan B, along with $5 million in cash from its balance sheet and $8 million of borrowings under the proposed asset-backed loan, will be used to refinance its existing $140 million ABL revolver due 2018, $350 million 8¼% senior secured notes due 2018, $8 million of PMC subordinated notes due 2018 and $4 million of debt and preferred equity from its holding company.

S&P said it plans to withdraw the issue-level and recovery ratings on the company's existing rated debt after it is repaid.

The ratings reflect a belief that Michael Baker International's proposed refinancing will not have a material impact on the company's overall credit ratios, the agency said.

The transaction will add just under $30 million of incremental debt to the company's capital structure and its adjusted leverage should increase to the mid-5x range from 5.1x as of Dec. 31, 2016, which still falls within expectations for the current rating, S&P said.

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