S&P rates Convergint loans B, CCC

S&P said it assigned B and 2 recovery ratings to DG Investment Intermediate Holdings 2 Inc.'s (Convergint Technologies) planned $1.26 billion first-lien credit facility. The facility will consist of a $150 million revolver, a $930 million term loan, and a $180 million delay draw term loan). The 2 recovery rating indicates an expectation for substantial recovery (70%-90%; rounded estimate: 70%) in default.

Concurrent, S&P gave the proposed $305 million second-lien term loan CCC and 6 recovery ratings. The 6 rating indicates an expectation for negligible recovery (0%-10%; rounded estimate: 0%) in default.

The company plans to use the proceeds with cash on hand and new preferred equity to refinance $990 million in outstanding debt, fund near-term tuck-in acquisitions and pay a $583 million dividend to its owners. “This dividend is the first by Ares Management LP since it acquired the company through a leveraged buyout in January 2018,” S&P said in a press release.

The agency said Convergint’s B- issuer credit rating and stable outlook are unchanged.

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