S&P trims Advisor Group, rates notes B

S&P said it cut the issuer credit rating on Advisor Group Holdings Inc. to B from B+. The agency also removed the rating from CreditWatch, where it was placed with negative implications in November. At the same time, S&P cut the existing first-lien rating to B and senior unsecured rating to CCC+ and assigned a B rating to the firm’s new first-lien notes.

Advisor will finance its acquisition of Ladenburg Thalmann with new first-lien debt, rolled Ladenburg unsecured notes and new equity from Reverence Capital.

Advisor’s plan rolls Ladenburg’s senior unsecured notes ($324 million outstanding) and issues $775 million in new first-lien notes. The remainder of the acquisition will be funded through about $280 million in added equity from Reverence Capital Partners, Advisor Group’s financial sponsor. The company expects the transaction to close in the first half of 2020 following shareholder and regulatory approvals.

The outlook is stable.

Fitch cuts Cable &Wireless notes

Fitch Ratings said it downgraded Cable & Wireless Communications Ltd.’s senior unsecured notes due 2026 and 2027 to B+/RR5 from BB-/RR4 following the announcement of a corporate restructuring that subordinated those notes.

These notes were originally issued by a special purpose vehicle, C&W Senior Financing DAC. There have been no additional changes to the company’s ratings, including its senior secured debt or long-term issuer default rating, which remain BB-.

The outlook is stable.

Moody’s trims Spirit Aerosystems

Moody’s Investors Service said it downgraded the senior unsecured debt rating of Spirit AeroSystems, Inc. to Ba2 from Baa3, and concurrently assigned the company a Ba2 corporate family rating, a Ba2-PD probability of default rating and an SGL-4 speculative grade liquidity rating. All ratings are on review for downgrade.

“The downgrade reflects our expectation that Spirit’s liquidity profile will quickly and materially erode in the absence of mitigating developments that remain largely out of the company's control,” said Eoin Roche, Moody's lead analyst for Spirit, in a press release.

Recent events have led Moody’s to assert Spirit's earnings and cash generating capability have weakened meaningfully relative to historical trends and prior expectations and will likely remain as such for at least the next two years, the agency said.

“Pending layoffs of size suggest ongoing event risk and operational disruption related to now much slower anticipated resumption of production on the MAX program, upon which Spirit is heavily dependent for about half of its revenue and the majority of its earnings and cash flow,” added Roche.

S&P ups Booz Allen

S&P said it upgraded the ratings on Booz Allen Hamilton Inc. and its secured debt to BB+ from BB and the rating on the unsecured debt to BB- from B+. The 3 recovery rating on its secured debt and 6 recovery rating on its unsecured debt remain unchanged.

“Significant earnings growth should improve the company’s credit ratios in 2020. A strong government spending environment has supported solid revenue growth for Booz Allen in recent years, which provided it with a significant backlog of nearly $23 billion as of Sept. 30, 2019 (representing almost three years of forecasted revenue). Because of our expectation for continued earnings growth, we anticipate that the company’s debt to EBITDA will be in the 2.2x-2.6x range in fiscal years 2020 and 2021, which compares with our previous expectation for the 2.8x-3.2x range,” said S&P in a press release.

The outlook is stable.

S&P ups Jagged Peak, pulls rating

S&P said it upgraded Jagged Peak Energy Inc. to BB from B and removed it from CreditWatch after Parsley Energy LLC completed its acquisition. S&P withdrew its issuer rating on Jagged since it was integrated into Parsley.

The agency also upgraded Jagged’s notes to BB from B+ and revised the recovery rating to 3 from 2, the same as Parsley’s, to reflect Parsley’s assumption of the debt.

S&P ups Parsley Energy

S&P said it upgraded Parsley Energy LLC to BB from BB- after it completed the acquisition of Jagged Peak Inc. The agency also raised the rating on Parsley’s unsecured notes to BB from BB-. The recovery rating is 3, reflecting an expectation of a meaningful recovery in the event of default.

“The upgrade reflects our expectation that Parsley’s financial measures will improve following the close of the Jagged Peak transaction combined with the company’s increased contiguous acreage position in the Delaware Basin, which will help improve financial measures. We expect Parsley will continue to maintain a modest financial policy, indicated by its all-stock transaction with Jagged Peak. Additionally, we expect the combined company’s production to be weighted toward oil, which will continue to support strong cash flow and profitability measures,” said S&P in a press release.

The outlook is stable.

S&P takes Pattonair off watch

S&P said it removed its B- long-term issuer credit rating on Pioneer Holdings (Pattonair) from CreditWatch positive, affirmed and withdrew this rating.

“We also affirmed and withdrew the B- issue rating on Pattonair’s senior secured debt. The outlook at the time of the withdrawal was stable. The withdrawal was at the issuer’s request following the full repayment of all outstanding rated debt,” said S&P in a press release.

The rating actions follow the merger between Wesco Aircraft Holdings and Wolverine Intermediate Holding II Corp., the parent of Pattonair.

In a separate rating action, S&P assigned its B- long-term issuer credit rating to Wesco.

S&P revises Six Flags view to negative

S&P said it revised the outlook for Six Flags Entertainment Corp. to negative from stable and affirmed the BB rating on the company.

The agency also affirmed the BBB- rating on the company’s senior secured credit facility ($800 million term loan B due 2026 and $350 million revolving credit facility due 2024) and BB- rating on the senior unsecured notes ($1 billion due 2024 and $500 million due 2027).

“We expect Six Flags to report 2019 results that will result in weak lease-adjusted debt to EBITDA around our 4x downgrade threshold. Operating performance in 2019 was below our expectations, particularly due to revenue challenges in the fourth quarter due to lower year-over-year attendance because of disappointing season pass and membership sales during the holiday sales period,” S&P said in a press release.

S&P rates Air Transport notes B+

S&P said it assigned a B+ and a 6 recovery rating to the proposed $400 million of senior unsecured notes to be sold by Air Transport Services Group Inc.

Proceeds will be partially used to repay borrowings on the company’s revolver.

Concurrently, S&P assigned BB rating to the company. “ATSG is a major provider of air freight transportation for Amazon.com Inc., with 24 aircraft leased to the company as of September 2019, and contracted to increase to at least 30 by the end of 2020. The company also provides airline services (such as crew to fly the planes) on all the aircraft it leases to Amazon. We hence expect ATSG to benefit from continued growth in the retail e-commerce industry, and from Amazon in particular,” said S&P in a press release.

The outlook is stable.

Moody’s assigns Air Transport notes Ba3

Moody’s Investors Service said it assigned new ratings to Air Transport Services Group, Inc., including a Ba2 corporate family rating and a Ba3 rating to the company’s proposed $400 million of senior unsecured notes due 2028, issued by subsidiary Cargo Aircraft Management, Inc.

Moody’s rated the senior notes one notch lower than the corporate family rating, reflecting the notes’ relative priority and proportion in the company’s capital structure and the strength of the notes’ asset coverage.

Air Transport’s Ba2 rating is supported by its position as one of the leading providers of air cargo fleet leasing and related services, including crew, maintenance and insurance services. The rating is also supported by the company’s good earnings growth, solid operating execution exhibited by high margins and a good liquidity profile, and a funding structure that is augmented by the new senior unsecured notes.

The outlook for both entities is stable.

S&P rates Ashton Woods notes B-

S&P said it assigned its B- issue-level rating and 4 recovery rating to Ashton Woods USA LLC’s proposed $250 million senior unsecured notes due 2028. The 4 recovery rating indicates an expectation for average (30%-50%; rounded estimate: 40%) recovery in the event of a payment default.

The company will use the proceeds to reduce the borrowings under its revolving credit facility (not rated), add cash to its balance sheet and for other general corporate purposes.

Moody’s assigns Ba3 to PUG loan

Moody’s Investors Service said it assigned a B1 corporate family rating and a B1-PD probability of default rating to PUG LLC (Viagogo), and assigned a Ba3 rating to Viagogo’s proposed $100 million first-lien senior secured revolver and $1.475 billion first-lien senior secured term loan. Moody’s also assigned a B3 rating to the company’s proposed $325 million senior secured second-lien notes. The outlook is stable.

Proceeds from new borrowings, $600 million of new preferred equity and $1.8 billion of new common equity will be used to fund the $4.05 billion acquisition of StubHub by Viagogo and pay related expenses.

The acquisition is expected to close in the first calendar quarter of 2020, subject to customary regulatory approvals.

Fitch assigns Buzz Merger loan BB

Fitch Ratings said it assigned a first-time BB- long-term issuer default rating to Buzz Merger Sub Ltd. (dba MagicLab), and assigned a BB/RR2 rating to the company’s proposed senior secured credit facility, which consists of a $50 million revolver and a $500 million term loan B.

The RR2 recovery rating on the senior secured debt reflects Fitch’s expectation for a superior recovery based on the company’s strong underlying cash flow generation, profitability and brand value.

MagicLab’s BB- IDR is supported by Bumble’s, one of its applications competitive positioning as a safe and female-friendly dating application, relatively conservative leverage profile, strong free cash flow generation and Fitch’s expectation for the company to achieve sustained strong revenue growth supported by a number of secular tailwinds.

The credit profile’s strengths are offset by material discretionary consumer spending exposure, limited product diversification and a concentrated ownership structure.

Moody’s rates Buzz Merger loan B1

Moody’s Investors Service said it assigned a B1 rating to Buzz Merger Sub Ltd.’s (doing business as MagicLab) proposed senior secured credit facilities, consisting of a $50 million revolving credit facility and $500 million term loan B. The outlook is stable.

Proceeds plus a $2.45 billion equity contribution from the Blackstone Group, co-investors and management will be used to finance the $3 billion acquisition of MagicLab. MagicLab is currently the trade name for Worldwide Vision Ltd., a Bermuda-domiciled entity that will be merged with and into Buzz Merger at transaction close.

Buzz Merger will become the surviving entity post-merger and assume the MagicLab trade name.

Moody’s assigned Buzz Merger a B1 corporate family rating and B1-PD probability of default rating. The B1 rating embeds MagicLab’s strong debt protection measures for the rating category. Pro forma for the transaction, Moody’s projects leverage at 4.1x total debt to EBITDA (as calculated by Moody’s at last 12 months at Sept. 30) with free cash flow to adjusted debt of about 2%.

S&P rates Cure TopCo B

S&P said it assigned B ratings to Cure Topco LLC. The company was formed from the merger of Signify Health and Remedy Partners, both owned by private equity investor New Mountain Capital.

“Our B issue-level ratings on the company’s senior secured revolving credit facility and first-lien term loan remain unchanged. The 3 recovery ratings (50%-70%, rounded estimate: 60%) also remain unchanged,” said S&P in a press release.

The outlook is stable.

Moody’s rates Novelis notes B2

Moody’s Investors Service said it assigned a B2 senior unsecured rating to $1.6 billion in senior unsecured notes issued by Novelis Corp. and guaranteed by Novelis Inc. and other subsidiaries.

Proceeds will be used to tender for the 6¼% senior unsecured notes due in August 2024 and for general corporate purposes, including providing financing towards the acquisition of Aleris International Inc. All other ratings for the two Novelis companies are unchanged.

Upon repayment, the rating on the notes maturing in August 2024 will be withdrawn.

In July 2018, Novelis announced the acquisition of Aleris for $2.6 billion ($775 million equity component and the balance the assumption of Aleris’ debt). The company has received approval from the European Commission conditional upon the sale of Aleris’ Duffel, Belgium plant as well as approval of the proposed buyer. The E.U. said it needs more time to review the proposed buyer and this is not expected to be completed by the Jan. 21 outside date in the merger agreement.

Novelis is in talks regarding the extension of this date. China’s State Administration for Market Regulation also approved Novelis’ proposed acquisition of Aleris. The U. S. Department of Justice has sued to block the transaction essentially on competitive concerns with respect to Aleris’ Lewisport facility. Novelis and the DOJ have agreed on a process and timetable for settling the dispute.

Moody’s assigns Presidio notes B1, Caa1

Moody’s Investors Service said it affirmed the B2 corporate family rating of Presidio Holdings Inc. (New) and assigned a B1 rating to the company’s proposed senior secured notes and Caa1 to the proposed senior unsecured notes.

Proceeds will be used to refinance acquisition bridge financing which, along with $855 million in contributed and rolled over equity, funded the roughly $2.2 billion acquisition of Presidio by BC Partners Advisors LP that closed on Dec. 19.

Presidio’s B2 rating reflects its small scale compared to competing IT value-added resellers and managed services firms, and the challenges of keeping up with evolving requirements of IT deployments for enterprises including the ongoing transition to cloud platforms. The buyout by BC Partners will result in debt to EBITDA of 6x (Moody’s adjusted). Presidio also has high vendor concentration with 59% of the company’s gross revenues represented by Cisco products and services, although improved compared to over 80% six years ago.

The outlook remains stable.

S&P rates Pugnacious loan B+, notes B-

S&P said it assigned a B+ rating to Pugnacious Endeavors Inc.’s senior secured credit facility, consisting of a $1.48 billion first-lien senior secured term loan and an undrawn $100 million revolving credit facility. The agency also rated the $325 million of second-lien secured notes B-. S&P assigned a B rating to Pugnacious.

Proceeds will be used in the $4.05 billion purchase of StubHub from Ebay Inc.

“Our B issuer credit rating incorporates our view of Pugnacious’ position as a leading secondary ticketing platform for the live events industry, its global reach, the potential for expanding EBITDA margins through cost reductions, and its good cash flow conversion capabilities,” said S&P in a press release.

The outlook is stable.

S&P rates Stena loan, notes BB-

S&P said it assigned its BB- issue-level rating to Stena International Sarl’s proposed senior secured term loan and proposed senior secured notes, which have an anticipated principal amount of about $600 million and will be guaranteed by Stena AB. The recovery rating is 2, indicating an expectation of substantial (70%-90%; rounded estimate: 75%) recovery in the event of a default.

Proceeds will be used to refinance the term loan B maturing in 2021.

The transaction is broadly leverage-neutral and does not affect the issuer credit rating, but it will secure long-term financing. The planned repayment of the €200 million senior unsecured notes at maturity in March will be through cash from the balance sheet.

S&P rates Zekelman loan BB

S&P said it assigned a preliminary BB and 2 recovery rating to Zekelman Industries Inc.’s new $900 million term loan B due 2027.

Concurrently, S&P placed all its ratings on Zekelman on CreditWatch with positive implications.

“We expect the term loan refinancing to eliminate a key ratings constraint. The refinancing will materially reduce Zekelman’s maturity risk given that 85% of the company’s current capital structure will become current in June 2020,” said S&P in a press release.

The transaction will allow Zekelman to use its projected $120 million-$140 million of free operating cash flow for other uses in 2020, including to further prepay its high-yield senior secured notes due 2023.

“We believe management is focused on reducing the company’s leverage to a level that would be commensurate with a higher rating,” S&P said.

S&P gives Buzz Merger loan B+

S&P said it assigned a B+ and 2 recovery rating to a proposed first-lien credit facility, which includes a $500 million term loan and a $50 million revolving credit facility to Buzz Merger Sub Ltd., doing business as MagicLab. The 2 recovery rating indicates an expectation of 70%-90% (rounded estimate: 75%) recovery in the event of default.

The Blackstone Group will use the proceeds along with $2.45 billion of common equity to acquire a majority stake in MagicLab.

S&P also assigned a B rating to the company. “Our rating on MagicLab reflects its position as the distant second market leader in online dating, its limited portfolio of apps, its participation in a competitive industry against larger and better-capitalized peers, and limited barriers to entry. MagicLab is best known within the U.S. for its fast-growing dating app Bumble and outside the U.S. for its more mature dating app Badoo,” S&P said in a press release.

The outlook is stable.

Correction: S&P gives Presidio loan B

S&P said it assigned a B rating to Presidio LLC’s proposed $625 million first-lien secured term loan and $100 million revolver with a 3 recovery rating. The agency also lowered Presidio’s rating to B from B+.

The rating was incorrectly reported by Prospect News on Jan. 7.

BC Partners funded a leveraged buyout with $1.425 billion of debt. The buyout boosted pro forma leverage around the low 6x area, significantly higher than S&P’s 5x downgrade trigger.

“We expect $800 million of additional debt which we will assign ratings to at a later date,” said S&P in a press release.

The outlook is stable.

Moody’s gives Zekelman loan Ba3

Moody’s Investors Service said it upgraded Zekelman Industries, Inc.’s corporate family rating to Ba3 from B1, its probability of default rating to Ba3-PD from B1-PD, its senior secured notes rating to B2 from B3 and assigned a Ba3 rating to the proposed $900 million senior secured term loan.

Zekelman plans to use the proceeds to pay off its term loan due in June 2021. The B1 rating on the senior secured term loan will be withdrawn when it is redeemed. The outlook is stable.

“The upgrade reflects the significant improvement in the company’s operating performance and credit metrics over the past two fiscal years and the expectation they will improve further in the near term. It also reflects the sustainability of its operating performance at a higher level than the past due to its strengthened competitive position after the consolidation of the tubular products sector,” said Michael Corelli, a Moody’s vice president, senior credit officer and lead analyst for Zekelman, in a press release.

The outlook is stable.

Moody’s cuts EQT

Moody’s Investors Service said it downgraded EQT Corp.’s senior unsecured rating to Ba1 from Baa3. Moody’s also assigned a Ba1 corporate family rating, a Ba1-PD probability of default rating and an SGL-2 speculative grade liquidity rating.

“EQT’s significantly weakening cash flow metrics in light of the persistent weak natural gas price environment and the company’s intent to refinance its 2020 maturities in lieu of debt reduction through repayment drives the ratings downgrade,” said Sreedhar Kona, Moody’s senior analyst, in a press release. “Although the company is pursuing several avenues to reduce debt and enhance its cash flow, the execution risk involved in those initiatives is reflected in the negative outlook.”

EQT’s senior unsecured notes are rated Ba1, the same as the company’s CFR, because all of the company’s long-term debt, which includes $1 billion term loan (unrated) and $2.5 billion revolving credit facility (unrated), is unsecured.

The outlook is negative.

Fitch assigns EQT notes BBB-

Fitch Ratings said it assigned a BBB- rating to EQT Corp.’s senior unsecured notes issuance. Proceeds will be used to refinance debt, including near term maturities.

The transactions help address the company’s maturity wall, and as such, Fitch views them favorably despite higher expected interest expense. The transactions should create additional breathing room to allow the company to focus on execution of its 2020 strategic plan.

The outlook remains negative.

S&P rates EQT notes BBB-

S&P said it assigned its BBB- issue-level rating to EQT Corp.’s proposed unsecured notes due 2025 and 2030.

S&P expects EQT to use the proceeds primarily to refinance debt, including its near-term maturities.

All existing issue ratings remain unchanged. The issuer credit rating on EQT remains BBB- with a negative outlook.

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