S&P cuts Wesco

S&P said it downgraded Wesco Aircraft Holdings Inc. to B- from B following the company’s acquisition by Platinum Equity and merger with Pattonair. S&P removed Wesco from CreditWatch with negative implications, where it was placed on Oct. 18.

The agency also downgraded the company’s $650 million secured notes due 2024 and $900 million secured notes due 2026 to B- from B and also removed them from CreditWatch with negative implications. The recovery rating remains 3. In addition, S&P downgraded $525 million unsecured notes due 2027 to CCC from CCC+ and removed it from CreditWatch with negative implications. The recovery rating remains 6.

Finally, S&P downgraded the rating on the $100 million payment-in-kind unsecured notes due 2028, issued by holding company parent Wolverine Intermediate Holding Corp., to CCC from CCC+ and removed it from CreditWatch with negative implications. The recovery rating remains 6.

“Platinum Equity is using a combination of debt and equity to purchase all shares of Wesco from public shareholders and repay the debt at Wesco and Pattonair. This will result in a material increase in leverage for the combined company, with our expectation of debt to EBITDA above 10x in 2020 as a result of the transaction and related costs but improving to a still high 6.8x-7.2x in 2021,” said S&P in a press release.

The outlook is stable.

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