Fitch assigns Secure Energy notes B+

Fitch Ratings said it assigned a first-time long-term issuer default rating to Secure Energy Services Inc. of B+. Additionally, the agency assigned a senior unsecured rating of B+/RR4 to Secure Energy’s planned issuance of senior unsecured notes.

The proceeds will be held in escrow pending the closing of the announced merger with Tervita Corp. and be returned to noteholders should the transaction not proceed. Upon merger close, the unsecured notes proceeds will be used to retire a portion of debt acquired as part of the merger.

“SES' EBITDA is expected to more than double with the with the TEV merger transaction. With synergy realization, Fitch anticipates the combined entity could reach $400 million within 18 months of deal close,” Fitch said in a press release.

“Additionally, Fitch forecasts leverage to decline over the forecast period to below 2x as free cash flow generated is allocated towards debt reduction, consistent with current management guidance calling for leverage below 2.5x within two years of transaction close,” the agency said.

The outlook is stable.

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