S&P gives Sesac facilities B+, CCC+

S&P said it revised its outlook on Sesac Holdco II LLC to stable from negative and affirmed its ratings, including the B corporate credit rating.

The agency also assigned a B+ issue-level rating and 2 recovery rating to the company's proposed senior secured first-lien credit facilities, which consist of a $40 million first-lien revolving credit facility due 2022 and a $365 million first-lien term loan due 2024. The 2 recovery rating indicates an expectation for substantial recovery (70%-90%; lower half of the range) of principal in the event of a payment default.

Additionally, S&P assigned a CCC+ issue-level rating and 6 recovery rating to the company's proposed $160 million second-lien term loan due 2025. The 6 recovery rating indicates our expectation for negligible recovery (0%-10%) of principal in the event of a payment default.

S&P will withdraw its ratings on Sesac's existing credit facility after the first- and second-lien debt are repaid.

The company announced that private equity funds affiliated with Blackstone Group LP entered into an agreement to acquire the company, and it is issuing $565 million in new financing.

Pro forma for the transaction, Sesac's adjusted debt to EBITDA would be above 8 times as of Sept. 30, 2016, though S&P expects the company's leverage to decline to the low-7 times area by the fiscal year ending March 2018, and that it will continue to generate healthy and stable cash flow, the agency said.

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