S&P ups Zekelman, rates loan BB

S&P said it upgraded Zekelman Industries Inc.’s rating to BB- From B+, and assigned a BB issue-level and 2 recovery ratings on the new seven-year $900 million term loan, which will be used to refinance the company’s existing term loan with $890 million outstanding.

“The term loan refinancing has mitigated a key ratings constraint. The refinancing materially reduced Zekelman Industries Inc.'s maturity risk, given that 85% of the company's capital structure was to become current in June 2020. The transaction could enable Zekelman to use its projected $120 million-$140 million of free operating cash flow to further prepay its high-yield senior secured notes due 2023. Of note, the company prepaid $225 million of its secured notes in August and September 2019,” said S&P in a press release.

S&P also raised its issue-level rating on the company's senior secured notes by one notch, to B+ from B. The 5 recovery rating is unchanged.

The outlook is stable.

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