S&P rates Equian loan B

S&P said it assigned a B corporate credit rating to Equian Buyer Corp.

The outlook is stable.

The agency also said it assigned a B rating to the company's proposed first-lien credit facilities, including a $30 million revolving commitment expiring in 2022 and $325 million term loan due in 2024. The recovery rating on the facilities is 3, indicating 50% to 70% expected default recovery.

The company's adjusted debt will be about $370 million at closing, which includes adjustments for operating leases and contingent debt obligations, S&P said.

The ratings reflect the company's substantial debt burden, small scale as a provider of technology-enabled payment integrity services to clients operating in the domestic health care and insurance industries, the agency said.

S&P also said it reflects the likelihood that the financial sponsor will influence financial governance.

The company's credit metrics are weak, including pro forma for the transaction debt-to-EBITDA of 6.7x, compared to 6x as of December 2016, the agency said.

The stable outlook reflects an expectation that Equian's operating performance, profitability and cash flow will remain healthy following the closing, leading to a debt-to-EBITDA ratio approaching 5.5x by year-end 2017 from about 6.7x at closing, S&P said.

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