S&P rates Light Tower notes B

Standard & Poor’s said it assigned a B corporate credit rating to LTR Holdco Inc., along with a B rating on its proposed $300 million senior secured notes due 2019.

The recovery rating is 3, indicating 50% to 70% expected default recovery.

The notes will be issued by Light Tower Rentals Inc. LTR Holdco will guarantee the notes.

The outlook is stable.

The proceeds will be used to pay a $193 million special distribution to its owners and to repay about $107 million of existing debt.

The ratings reflect the company’s vulnerable business risk profile, aggressive financial risk profile and adequate liquidity, S&P said.

These include LTR’s limited scale of operations and product diversity and the potential volatility of cash flows due to its reliance on the cyclical capital spending levels of the exploration and production industry, the agency said.

The ratings benefit from the company’s good profitability and its flexibility to cut back on capital spending during a downturn, S&P added.

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