S&P rates Midas loans CCC+

S&P said it gave SK HoldCo LLC (Service King) subsidiary Midas Intermediate Holdco II LLC’s new revolver and term loan a CCC+ rating with a 3 recovery rating, indicating an expectation of meaningful recovery (50%-70%; rounded estimate 55%) in default.

Service King refinanced its senior secured credit facilities with a new $91 million revolver and $775 million term loan B, extending the maturity of its revolver to 2024 and the maturity of its term loan to 2025.

Consequently, S&P upgraded Service King’s issuer rating to CCC+ from CCC and its unsecured notes to CCC- from CC. The 6 recovery rating indicates an expectation for negligible recovery (0%-10%; rounded estimate: 0%) in default. S&P removed both ratings from CreditWatch with positive implications where they were placed on Dec. 8.

The agency assigned a negative outlook. The outlook reflects the risk Service King could engage in a refinancing or restructuring transaction S&P would consider distressed. It also reflects the uncertainty of how quickly revenues and margins will stabilize, given the recent pandemic surge, the agency said.

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