S&P gives First Advantage loans B, CCC

S&P said it assigned a B rating with a 3 recovery rating to STG-Fairway Holdings LLC’s, which does business as First Advantage, proposed first-lien credit facilities and a CCC issue-level and 6 recovery rating to the proposed second-lien term loan.

Silver Lake Partners and management are taking the company private in a leveraged buyout. The transaction will be funded with a $620 million first-lien term loan, $195 million second-lien term loan, and equity (including management rollover). The company will also have access to a $75 million first-lien revolving credit facility, undrawn at close.

S&P also changed the outlook to negative from stable. “The negative outlook reflects First Advantage’s high pro forma debt leverage and that an increasingly competitive landscape and slowing economic growth may limit the company’s ability to maintain share. Pro forma for the transaction, we expect First Advantage’s year end 2019 leverage to increase to the low-7x area, from 4.9x for the same period,” said S&P in a press release.

The agency also affirmed the company’s B rating.

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