S&P rates Kronos Acquisition loan B-, notes CCC

Standard & Poor’s said it assigned a preliminary B- long-term corporate credit rating to Kronos Acquisition Holdings Inc.

The agency also said it assigned a preliminary B- rating to the company’s proposed $850 million senior secured term loan and CCC rating to the proposed $390 million senior unsecured notes.

The outlook is stable.

The ratings reflect the agency’s view of the proposed leveraged buyout, S&P said.

Kronos was created to acquire KIK Custom Products Inc. for about $1.6 billion. Upon the transaction’s closing, S&P said it will finalize the ratings on Kronos and withdraw the ratings on KIK Custom.

The ratings on Kronos reflect the company’s weak business risk profile and highly leveraged financial risk profile, the agency said.

The stable outlook on Kronos reflects an expectation that the leveraged buyout will increase fully adjusted debt leverage to about 8x in the next two years, S&P said, and the company will generate modest free operating cash flow that it could use for debt reduction.

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