S&P rates Vander notes B

S&P said it affirmed the B corporate credit rating on Vander Intermediate Holding III Corp.

The agency also said it assigned a B rating and 4 recovery rating to the company's proposed $1.025 billion senior secured second-lien notes due 2024.

The 4 recovery rating indicates 30% to 50% expected default recovery.

Vander's operating subsidiaries, Blueline Rental Finance Corp. and Blueline Rental LLC, will co-issue the notes.

The outlook is negative.

The proceeds will be used to redeem its existing $760 million senior secured second-lien notes due 2019 and $201 million of holding company payment-in-kind (PIK) toggle notes due 2019, the agency said.

The agency said it believes that Vander's equity sponsors will retire about $43 million of the company's promissory notes due to affiliates.

Vander's debt leverage remains high with debt-to-EBITDA ratio of 7.4x as of the end of 2016.

But the agency said it forecasts an increase in construction spending in 2017 that will allow the company to reduce the leverage ratio.

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