S&P gives Nico Middle East notes B-

Standard & Poor's said it assigned its B preliminary long-term issuer credit rating to Nico Middle East Ltd.

The outlook is stable.

The agency also assigned a B- preliminary issue rating to Nico Middle East's proposed $350 million senior unsecured five-year notes, one notch below the corporate credit rating. The preliminary recovery rating on the notes is 5, indicating an expectation of modest (10%-30%) recovery prospects for noteholders in the event of a payment default.

Nico Middle East plans to use the proceeds from the notes to refinance part of its existing debt and to fund capital expenditure. This will involve repayment of $120 million of existing debt, $180 million of capital expenditure and $10 million of transaction fees and expenses. The remaining $40 million will be held as cash.

S&P said the notes rating assumes that they will have similar terms and conditions to those presented, including a comprehensive security, guarantee and financial covenant package.

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