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S&P rates Motor Fuel loans B, CCC+
S&P said it assigned a B rating with a 3 recovery rating to Motor Fuel Group’s proposed senior secured term loan B2 incremental loan. The agency also affirmed the ratings on the existing term loan B2 facility.
S&P assigned a CCC+ issue rating with a 6 recovery rating to the company’s proposed second-lien incremental loan and affirmed the ratings on the existing second-lien facility.
The company plans to use balance sheet cash of £170 million and added borrowings of about £230 million to pay shareholder dividends totaling £390 million.
“The proposed dividend recapitalization will not materially change our assessment of MFG. The transaction would cause the company’s adjusted debt to EBITDA to increase to 7x in 2019 from 6.2x in a no-dividend recapitalization scenario. However, this is still consistent with the current rating level, and it reflects our expectation that the company will return cash to its shareholders under its financial sponsor ownership,” said S&P in a press release.
S&P considers the transaction credit neutral, but said it leaves the company limited financial headroom.
The outlook is negative.
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