S&P rates Onvoy loan B+, CCC+

S&P said it assigned a B corporate credit rating to Onvoy LLC.

The agency also said it assigned a B+ rating and 2 recovery rating to the company's proposed $35 million secured first-lien revolver due in 2022 and $500 million secured first-lien term loan due in 2024. The 2 recovery rating indicates 70% to 90% expected default recovery.

S&P also said it assigned a CCC+ rating and 6 recovery rating to the company's proposed $180 million senior secured second-lien credit facility due in 2025. The 6 recovery rating indicates 0 to 10% expected default recovery.

The outlook is stable.

The proceeds from the proposed credit facilities, along with new equity from private equity firm GTCR and rollover cash equity, will be used to fund the acquisition of Inteliquent, which is expected to close in the first half of 2017, the agency explained.

The ratings reflect high adjusted leverage with pro forma debt-to-EBITDA of about 5.5x, S&P said.

The ratings also consider the aggressive financial policy employed by private equity sponsor GTCR that may result in increased leverage in the future, the agency added.

The ratings also capture the company's relatively small market share in a competitive industry and its reliance on obtaining favorable leasing terms from network suppliers, S&P said.

Partly offsetting factors include the expanded geographical footprint with the acquisition of Inteliquent's network, as well as relatively stable cash flow generation, the agency said.

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