S&P lowers Opal Acquisition

Standard & Poor’s said it downgraded Opal Acquisition Inc. to B- from B. The outlook is stable.

S&P also lowered the ratings on Opal’s $125 million revolver and $1.3 billion term loan to B- from B. The recovery ratings on these issues remain 3, indicating that lenders could expect a meaningful (50%-70%) recovery (in the upper half of the range) in the event of a payment default.

In addition, S&P lowered the rating on Opal’s $610 million 8 7/8% senior unsecured notes to CCC from CCC+. The recovery rating on the senior unsecured notes remains 6, indicating that lenders could expect a negligible (0%-10%) recovery in the event of a payment default

“The downgrade is based on Opal’s weaker-than-expected operating performance in 2014-2015 and its sustained high leverage since its leveraged buyout in November 2013,” said S&P credit analyst James Sung in a news release.

“At the time, leverage went up to above 8x on a pro forma basis and we had expected that level to steadily decrease in 2014-2015 based on EBITDA growth and debt repayment. Since then the company missed our revenue and EBITDA expectations in 2014 and is likely to do so again in 2015.”

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