S&P trims Omnitracs first-lien loan to B

Standard & Poor’s said it affirmed the B corporate credit rating on Omnitracs Inc. The outlook is stable.

At the same time, S&P lowered the issue-level rating on the company’s $555 million first-lien term loan due 2020 to B from B+ and revised the recovery rating to 3 from 2, driven by the incremental increase to first-lien debt in the capital structure. The 3 recovery rating indicates an expectation for meaningful (50% to 70%) recovery in the event of payment default.

S&P also affirmed the CCC+ issue-level rating on the $190 million second-lien term loan maturing 2021. The recovery rating is 6, indicating an expectation for negligible (0% to 10%) recovery in the event of payment default.

“The ratings on Omnitracs reflect the company’s ‘weak’ business risk profile and ‘highly leveraged’ financial risk profile, incorporating the company’s limited scale and narrow end-market focus, and our view that private equity ownership is likely to preclude sustained deleveraging over the longer term,” said S&P credit analyst James Thomas in a news release.

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