S&P: Spin Holdco debt B, view stable

S&P said it affirmed Spin Holdco Inc.’s (doing business as CSC ServiceWorks) B corporate credit rating and revised the outlook to stable from negative.

At the same time, the agency assigned a B issue-level rating and 3 recovery rating to the company's proposed $1,686,000,000 senior secured first-lien debt, which includes a $120 million revolving credit facility due 2021 and a $1,566,000,000 first-lien term loan due 2022. The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a payment default.

S&P will withdraw the ratings on the existing senior secured first-lien debt once the transaction closes and the debt is repaid. Pro forma for the transaction, the agency estimates total reported debt outstanding of about $1.8 billion.

"The outlook revision reflects Spin's stabilizing operating performance, improved free cash flow, modestly better but still highly leveraged credit metrics, and adequate covenant cushion, along with our expectation for gradually improving operating performance over the next 12 months due the company's more effective pricing and cost management," S&P credit analyst Katherine Heng said in a news release.

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