S&P rates Moly-Cop notes B

S&P said it assigned a B corporate credit rating to AIP/MC Holdings LLC (Moly-Cop).

American Industrial Partners signed an agreement to acquire Arrium Ltd.'s mining consumables division Moly-Cop and will form AIP/MC Holdings, S&P explained.

The $1.16 billion acquisition will be funded by $725 million in senior secured notes and a $500 million common equity contribution from the sponsors, the agency said.

S&P also said it assigned a B rating to the proposed $725 million senior secured notes due 2023. The recovery rating is 3, indicating 50% to 70% expected default recovery.

As part of the transaction, a new $125 million asset-based lending revolving credit facility is unrated.

The outlook is stable.

The borrowers of the notes are subsidiaries Grinding Media Inc. and MC Grinding Media (Canada) Inc.

The stable outlook reflects a view that Moly-Cop's financial and business risk profiles are unlikely to change over the next year, S&P said.

The financial risk profile takes into account the financial sponsor ownership, which is typically associated with more aggressive financial policies, the agency said.

The company’s business risk also is considered in the weaker range of a “fair” assessment, S&P added.

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