S&P rates Audatex notes BB-

Standard & Poor's said it assigned a BB- rating and 4 recovery rating to Audatex North America Inc.'s new $400 million senior unsecured notes.

The 4 recovery rating indicates 30% to 50% expected default recovery, S&P said.

The BB- rating and 4 recovery ratings on Audatex North America's existing 6% senior unsecured notes remain unchanged following its add-on of $450 million to the notes, resulting in issuance of $1.3 billion.

The company will use the proceeds to pay down its existing $850 million 6¾ senior unsecured notes.

The company is a subsidiary of Solera Holdings Inc., which has a corporate credit rating of BB- and a stable outlook.

The refinancing transaction will not result in any change in an expected total adjusted leverage, which was about 4.7x as of June 30 on a pro forma basis, S&P said.

The agency also said it expects the company's adjusted leverage will decrease to the mid-to low-4x range over the next two years due to organic EBITDA growth and incremental EBITDA contribution from acquisitions.

The ratings reflect the company's fair business risk profile and aggressive financial risk profile, incorporating its relatively narrow target market and an aggressive growth strategy that results in spikes in leverage, S&P said.

Consistent profitability, good cash flow generation and a solid market position in the global automobile insurance claims processing industry partially offset these factors, the agency said.

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