S&P rates Apollo Security loans B, CCC+

Standard & Poor’s said it assigned a B corporate credit rating to Apollo Security Services Borrower LLC.

The outlook is stable.

The agency also said it assigned a B rating and 3 recovery rating to the company’s $1.055 billion first-lien term loan due 2021 and $95 million revolver due 2020.

The 3 recovery rating indicates 50% to 70% expected default recovery.

S&P also said it assigned a CCC+ rating and 6 recovery rating to the company’s $300 million second-lien term loan due 2022. The 6 recovery rating indicates 0 to 10% expected default recovery.

Apollo Global Management recently agreed to acquire Protection One Inc. and ASG Security for $2 billion.

Apollo is merging the two companies under the Apollo Security Services Borrower name, S&P said.

The combined company will be the sixth largest U.S. alarm monitoring company based on recurring monthly revenue and operate under the Protection One Inc. brand, the agency said.

The ratings on Protection One also were removed from CreditWatch, where they were placed with negative implications in May, S&P said. The agency also said it withdrew the B corporate credit rating Protection One.

The rating on Apollo Security Services Borrower reflects the company’s middle-tier position in the intensely competitive and highly fragmented U.S. alarm-monitoring industry, which is characterized by high customer attrition, significant subscriber acquisition costs and low barriers to entry, S&P said.

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