S&P affirms CPG on upsizing

S&P said it affirmed the B issuer credit rating on CPG Intermediate LLC and B issue-level rating on its revolving credit facility and first-lien term loan, which the company proposes to upsize.

The recovery rating remains at 3, indicating 50% to 70% expected default recovery.

CPG Intermediate is planning to refinance its capital structure with an incremental fungible first-lien term loan.

The agency also said it expects to withdraw the issue-level rating on the second-lien term loan once the refinancing has been completed and the debt has been repaid.

The outlook is stable, reflecting an expectation that the company will maintain weighted-average adjusted debt-to-EBITDA ratio in the 5x to 6x range pro forma for acquisitions, S&P said.

The company intends to raise a $134 million incremental fungible first-lien term loan to repay the existing $135 million second-lien term loan, the agency said.

The ratings reflect the pro forma capital structure upon completion of the proposed refinancing. The transaction is broadly leverage neutral, the agency noted.

The debt at the company is issued by Encapsys LLC, IPS Structural Adhesives Holdings Inc., and IPS Intermediate Holdings Corp.

The ratings also consider CPG's niche markets and limited applications in generally competitive product markets, S&P said.

CPG also has production concentration in a single site that generates a meaningful portion of its revenue and the company faces some customer concentration, with one customer accounting for a significant amount of its sales, the agency said.

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