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S&P rates Avantor loans B, CCC+
S&P said it assigned a B corporate credit rating to Avantor Inc.
The outlook is stable.
The agency also said it assigned a B rating and 3 recovery rating to the company's proposed $1.425 billion first-lien term loan and $75 million revolving credit facility.
The 3 recovery rating indicates 50% to 70% expected default recovery.
S&P also said it assigned a CCC+ rating and 6 recovery rating on the company's proposed $380 million second-lien term loan.
The 6 recovery rating indicates 0 to 10% expected default recovery.
Avantor Performance Materials Holdings LLC will issue the proposed debt.
Avantor plans to issue a $75 million revolving credit facility, $1.425 billion first-lien term loan and $380 million second-lien term loan to refinance its existing capital structure and to make a $439 million distribution to shareholders.
Avantor reorganized its corporate structure following its merger with NuSil Technology LLC in 2016, the agency said.
Despite the increased leverage resulting from the transaction, the agency said it expects the company to generate improved EBITDA and free cash flow, which should bring credit metrics in line with expectations at the current rating, including pro forma weighted debt-to-EBITDA in the 5x to 6x range.
The ratings reflect the company’s fair business risk profile and successful implementation of cost-savings initiatives, which will improve profitability, S&P said.
The addition of the NuSil business provides the company with exposure to the recession-resistant specialty silicone market, the agency said.
NuSil has very solid market positions in the niche markets in which it operates, producing proprietary silicone raw material compounds primarily for the health care and defense markets, S&P said.
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