S&P affirms Kronos after add-on

S&P said it affirmed the B- long-term corporate credit rating on Kronos Acquisition Holdings Inc. based on its expectation that the proposed transaction should support fixed charges and will not have a material impact on credit metrics and cash flows.

The outlook is stable.

Kronos is proposing to refinance its $1.085 billion term loan with a new $235 million add-on to its existing $390 million senior unsecured notes, S&P said.

The proceeds will be used to repay a portion of the term loan outstanding that was issued in April 2016 to fund the Prestone Group acquisition, the agency said.

The debt repayment improves the recovery prospects on the company’s first-lien term loan, S&P said.

The agency said it affirmed the company’s B- rating on the company's first-lien term loan and revised its recovery rating on the debt to 3 from 4 based on these improved recovery prospects. The 3 recovery rating indicates 50% to 70% expected default recovery.

The ratings reflect an expectation that the proposed transaction should support fixed charges, S&P said, and lead to better recovery prospects for the first-lien term loan.

The agency also affirmed the CCC rating on the company’s senior unsecured notes, including the proposed $235 million add-on.

The 6 recovery rating on the notes is unchanged, reflecting 0 to 10% expected default recovery.

The ratings reflect the company's weak business risk profile and highly leveraged financial risk profile, S&P said.

The proposed transaction will not have a material impact on the company's fixed charges as higher interest will be offset by lower debt amortization, the agency said.

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