S&P rates Aveanna debt B-, CCC, notes CCC

S&P said it assigned a B- rating to Aveanna Healthcare LLC’s proposed $560 million senior secured first-lien debt. The recovery rating is 3, indicating an estimate for meaningful recovery (50%-70%; rounded estimate: 55%) in the event of a payment default.

For the second-lien debt, S&P assigned a CCC issue-level rating to the proposed $410 million second-lien term loan. The recovery rating is 6, indicating S&P’s estimate for negligible recovery (0%-10%; rounded estimate: 0%) in case of a payment default. The $410 million second-lien term loan consists of $245 million of new debt and $165 million from Aveanna’s existing $240 million second-lien term loan that will roll into the new facility.

S&P affirmed its B- rating on Aveanna.

“Our rating affirmation reflects Aveanna’s increased size, scale, and business diversity following the Maxim acquisition, offset by the high leverage of 8.1x in 2020 and 7.2x in 2021 and our expectation of a modest discretionary cash flow deficit in 2020. We believe the Maxim transaction will diversify Aveanna’s business, reducing its Texas exposure to 17% of revenue (from 29%) while increasing its presence to 34 states (from 23),” said S&P in a press release.

The outlook is negative.

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