S&P lowers Waterjet notes on upsizing

Standard & Poor's said it revised the preliminary recovery rating on Waterjet Holdings Inc.'s proposed senior secured notes to 3, indicating 50% to 70% expected default recovery, from 2, which indicates 70% to 90% expected default recovery.

The agency also said it lowered the preliminary issue-level rating on this debt to B from B+, in accordance with the notching criteria for a 3 recovery rating.

The rating revision follows Waterjet's upsizing of its proposed senior secured notes due 2020 by $25 million to $225 million.

The agency said it believes this larger size debt class reduces recovery prospects in the event of a default.

The preliminary B corporate credit rating and stable rating outlook on Waterjet are unaffected.

The preliminary rating continues to reflect the company's vulnerable business risk profile and aggressive financial risk profile, S&P said.

The agency said it expects that modest revenue growth and improving margins will allow the company to maintain leverage below 5x.

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