S&P gives Cetera loans B-, CCC

S&P said it assigned its B- issuer credit rating to Aretec Group Inc. (Cetera).

The outlook is stable.

At the same time, the agency assigned its B- issue rating to the company's proposed first-lien revolving credit facility and term loan and a CCC rating to the company's proposed second-lien term loan.

Genstar Capital LLC announced that an affiliate has entered into an agreement to acquire Aretec. Genstar will fund the acquisition by raising roughly $1 billion in debt and an equity contribution.

“Our ratings on Aretec Group reflect the company's very weak capitalization because of a lack of tangible equity, high leverage (as measured by debt to EBITDA and as defined by the company's credit agreement), and low profitability compared with peers, albeit with very limited market or credit risk,” S&P said in a news release.

“It also reflects the company's relatively weaker market position than some rated peers, in a stable line of business, because of the lack of a longer track record of stable performance following the reorganization, as well as any lasting increased litigation risk or reputational damage from the recent bankruptcy.”

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