S&P upgrades Acelity

S&P said it upgraded Acelity LP Inc.'s issuer credit rating to B+ from B, reflecting the company's improved operating performance and an expectation that Acelity will be able to withstand competitive pressures, maintaining its financial measures at the improved levels.

The agency also said it raised the issue level ratings on the first-lien senior secured debt to B+ from B, along with the ratings on the third-lien debt to B from B-.

Acelity outperformed the agency's 2018 expectations with strong cash flow generation in excess of $150 million and a reduction of leverage to 5.7x, S&P explained.

This was helped by higher-than-expected revenue and improvements in working capital, the agency said.

Acelity also announced its intention for an initial public offering with the primary proceeds to be used to repay debt, S&P said.

The financial sponsor will gradually reduce its stake over time, the agency said.

The positive outlook reflects the potential for a higher rating if, following the IPO, the company adopts a more conservative financial policy and maintains its long-term leverage at less than 5x, S&P added.

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