S&P rates Sparta loans B-, CCC

S&P said it assigned its B- corporate credit rating to Project Silverback Holdings Corp., the parent company of Sparta Systems Inc. The outlook is stable.

At the same time, S&P assigned a B- issue-level rating and 3 recovery rating to the company's $265 million first-lien credit facility, consisting of a $25 million revolving credit facility due 2022 and a $240 million first-lien term loan due 2024. The 3 recovery rating indicates an expectation of meaningful (50%-70%; rounded estimate 60%) recovery in the event of a default.

In addition, the agency assigned a CCC issue-level rating and 6 recovery rating to the company's $75 million second-lien term loan due 2025. The 6 recovery rating indicates an expectation of negligible (0%-10%; rounded estimate 5%) recovery in the event of a default.

“The rating on Project Silverback reflects our view of Sparta Systems' limited scale focusing on the highly fragmented quality management systems (QMS) market and its biopharma industry concentration, partly offset by its high customer retention rates and above-average adjusted EBITDA margins,” said S&P credit analyst Geoffrey Wilson in a news release.

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