S&P rates HALO Buyer loans B, CCC+

S&P said it assigned its B corporate credit rating to HALO Buyer Inc. The outlook is stable.

At the same time, S&P assigned a B issue-level rating and 3 recovery rating to the company's first-lien credit facilities, including a $50 million revolving credit facility due in 2023, $205 million first-lien term loan due in 2025, and $90 million delayed-draw term loan due 2025.

The 3 recovery rating indicates an expectation for meaningful recovery (50%-70%; rounded estimate: 60%) in the event of payment default.

Additionally, S&P said it assigned a CCC+ issue-level rating and 6 recovery rating to the company's proposed $75 million second-lien term loan due in 2026. The 6 recovery rating indicates an expectation for negligible recovery (0%-10%; rounded estimate: 0%) in the event of payment default.

S&P said HALO's rating reflects the highly fragmented market and cyclical business that it operates in, particularly given its small scale and reliance on contracted account executives (AEs) to drive revenue. Partially offsetting these risks is S&P’s view that disintermediation by suppliers is unlikely and that it has a limited customer base, end market and supplier concentration, and historically high customer and account executive retention rates.

U.S.-based HALO Buyer is a marketing services provider for the promotional products industry that has agreed to be acquired by TPG Growth from Audax Private Equity for an undisclosed amount.

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