S&P rates Sterigenics-Nordion notes CCC+

S&P said it affirmed the B corporate credit rating on Sterigenics-Nordion Holdings LLC, along with the B rating on its senior secured debt.

The recovery rating on this debt remains at 3, indicating 50% to 70% expected default recovery.

S&P also said it affirmed the CCC+ rating on the senior unsecured debt. The recovery rating on this debt remains at 6, indicating 0 to 10% expected default recovery.

The agency also said it assigned a CCC+ rating and 6 recovery rating on the new $350 million payment-in-kind toggle notes issued by parent holding company Sterigenics-Nordion Topco LLC.

The outlook is stable.

The ratings reflect an expectation for continued revenue and EBITDA growth following the company's recapitalization with Warburg Pincus and GTCR in May 2015, S&P said.

Although the debt-funded dividend will increase adjusted leverage moderately to 8.5x in 2016 from a previous expectation of 7.4x, the agency said it believes that Sterigenics will continue to generate enough cash flow to support its plans for capital expansion and tuck-in acquisitions.

Sterigenics is the world's largest provider of contract sterilization services with a global market share in excess of 35%, S&P said.

Although the company has a leading position in its specific addressable market, it remains focused on a relatively narrow business niche, the agency added.

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