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S&P rates SPX loans B-, notes CCC+
S&P said it cut SPX Flow Inc.’s issuer rating to B- from BB and assigned B- issue and 3 recovery ratings (rounded estimate: 60%) to its planned first-lien credit facilities and CCC+ with 5 recovery ratings (rounded estimate: 10%) to its planned senior unsecured notes. The agency also removed the issuer rating from CreditWatch where it was placed with negative implications on Dec. 15.
SPX is issuing the debt to help finance its acquisition by Lone Star Funds for about $3.8 billion. The proposed debt financing will consist of an undrawn $200 million first-lien revolving credit facility, $1.54 billion first-lien term loan and $570 million unsecured notes.
“The acquisition will significantly increase the company's debt burden. We expect SPX Flow to improve leverage to the 7x-8x range by the end of 2022 from an estimated 10x-11x in 2021 pro forma for the transaction financing. We believe deleveraging over the next 12 months will be primarily driven by EBITDA growth, with a sizable boost to EBITDA in 2022 largely due to the benefits of pricing and cost actions in 2021,” S&P said in a press release.
The outlook is stable.
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