S&P rates ATS Consolidated loans B, CCC+

S&P said it assigned a B corporate credit rating to ATS Consolidated Inc., which does business as American Traffic Solutions.

The agency also said it assigned a B rating and 3 recovery rating to the company's proposed $325 million first-lien term loan due 2024. The 3 recovery rating indicates 50% to 70% expected default recovery.

S&P also said it assigned a CCC+ rating and 6 recovery rating to the company's proposed $100 million second-lien term loan due 2025. The 6 recovery rating indicates 0 to 10% expected default recovery.

The outlook is stable.

The ratings reflect the company's small size relative to rated peers, significant customer concentration, litigation risk and its high leverage post-transaction at higher than 5x, the agency said.

The company's solid market position, long-standing customer relationships and ability to scale the business profitably partly offset these risks, S&P said.

The agency also said it expects the company's credit metrics and revenues to improve slightly over the forecast period.

Pro forma for the transaction, adjusted leverage will be about 5.3x and free cash flow-to-debt will be in the mid- to high single-digit percentage range in the next 12 months, S&P said.

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