S&P rates Mavenir loan B-

S&P said it assigned its B- corporate credit rating to Mavenir Private Holdings II Ltd. The outlook is stable.

S&P also assigned a B- issue-level rating and 3 recovery rating to Mavenir Systems Inc.'s proposed $610 million first-lien facilities, which consist of a $60 million revolving credit facility due 2023 and a $550 million term loan B due 2025. The 3 recovery rating indicates an expectation for meaningful recovery (50%-70%; rounded estimate: 50%) for lenders in the event of a payment default.

Mavenir will use proceeds from the proposed term loan to refinance about $492 million of existing debt (which includes accrued interest), add about $44 million of cash to the balance sheet, and pay related fees and expenses.

“The ratings on Mavenir reflect its elevated adjusted debt to EBITDA of about 10x, and our expectation that leverage will remain high longer term because of its private equity ownership,” S&P said in a news release.

“The ratings also reflect competition from larger players, substantial customer concentration, small scale, and our expectation for negative free operating cash flow (FOCF) over at least the next year.”

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