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S&P: Strategic Materials, facilities B, CCC+
S&P said it assigned its B corporate credit rating to Strategic Materials Holdings Corp. and assigned a B issue-level rating to the company's proposed first-lien facilities (consisting of a $40 million revolving credit facility and $235 million first-lien term loan).
The recovery rating is 3, indicating an expectation of meaningful (50%-70%; rounded estimate: 60%) recovery for lenders in the event of a payment default.
The agency also assigned a CCC+ issue-level rating to the company's proposed $80 million second-lien term loan. The recovery rating is 6, indicating an expectation of negligible (0%-10%; rounded estimate: 5%) recovery.
The outlook is stable.
S&P said the ratings on Strategic Materials reflect a view of the company's small size in the highly competitive and fragmented North American environmental services market, very meaningful customer and supplier concentration, narrow scope of operations, limited product offering, high leverage, and potential for aggressive financial policies stemming from the company's financial sponsor ownership.
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