S&P gives Tervita notes B

S&P said it assigned its B issue-level rating to Tervita 2018 Escrow Corp.'s first-lien secured notes due 2021 and placed the rating on CreditWatch with positive implications.

The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate 55%) recovery in a default scenario.

Tervita 2018 Escrow is a wholly owned subsidiary of Tervita Corp., and its proposed first-lien debt will be effectively second-lien debt under Tervita at the close of the Newalta Corp. merger transaction.

The company plans to use proceeds along with a revolver draw, unsecured debt funding from its largest shareholder and cash on hand to refinance Newalta's existing debt following the merger.

S&P said the new issue does not affect the B long-term corporate credit rating on the parent, which remains on CreditWatch with positive implications where it was placed on March 1, pending the completion of the Newalta merger.

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