S&P lowers Lindblad bank ratings

S&P said it lowered Lindblad Expeditions Holdings Inc.’s senior secured credit facility rating to B- from B and revised its recovery rating to 3 from 2. The facility consists of a $45 million revolver and a $200 million term loan.

The changes reflect the lenders’ reduced recovery prospects following the issuance of an incremental unrated $85 million Main Street loan, which is pari passu with, and incurred as a new tranche under the credit facility, S&P said. The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate: 55%) recovery in default.

The credit facility is issued under Lindblad’s subsidiaries Lindblad Expeditions LLC and Lindblad Maritime Enterprises Ltd. The company’s $85 million Main Street loan follows the standard terms for the U.S. Federal Reserve’s Main Street lending program, including a relatively low-interest rate, interest that is paid in kind (PIK) for the first year of the facility, amortization of 15% in years three and four of the loan and a final bullet payment of 70% at maturity in year five.

The company plans to use the proceeds for general corporate purposes that are not prohibited by the Coronavirus Aid, Relief, and Economic Security Act and to pay fees and expenses.

“While we view the incremental liquidity provided by this transaction as credit positive, our B- issuer credit rating and negative outlook on Lindblad are unchanged because we expect the company’s credit measures to remain very weak through 2021 because of a prolonged suspension of sailings, a potentially slower resumption of voyages, and the incremental debt and debt-like convertible preferred stock issuances it undertook in 2020 to support its liquidity,” S&P said in a press release.

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