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S&P rates Adesa loan BB
Standard & Poor's said it assigned its BB corporate credit rating to Adesa Inc. and assigned its BB rating to Adesa's new $500 million senior secured bank credit facility.
The outlook is stable.
Proceeds from the new credit facility, combined with a planned public bond offering and $150 million initial public offering, will be used to refinance existing debt and to pay a $100 million dividend to the company's parent, Allete Inc. (BBB+/Watch developing/A-2). Within a few months of the IPO, Allete intends to spin off its remaining interest in Adesa to Allete shareholders.
S&P said the ratings reflect Adesa's slightly below-average business profile, characterized by a competitive operating environment, its risky financing operations, its large customers with considerable leverage, and somewhat variable demand.
These challenges more than offset Adesa's solid No. 2 market position, growing market share with key accounts, and good geographic scope. The ratings also incorporate Adesa's historically aggressive financial policy and its below-average cash flow protection.
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