S&P rates Kiwi VFS loans B, CCC+

S&P said it assigned its B long-term issuer credit rating to Kiwi VFS SUB I Sarl (VFS). The outlook is stable.

At the same time, S&P assigned a B issue rating to the upsized CHF 783 million equivalent term loan B (comprising of a B1 tranche of £321 million and a B2 tranche of €315 million), and $39 million revolving credit facility, both borrowed by VFS.

The recovery rating on these facilities is 3, indicating an expectation of meaningful recovery prospects (50%-70%; rounded estimate: 55%) in the event of a payment default.

S&P also assigned a CCC+ issue rating to VFS' CHF 72 million equivalent ($73 million) second-lien term loan. The recovery rating on this loan is 6, indicating an expectation of negligible recovery prospects (0%-10%; rounded estimate: 0%) in the event of a payment default.

Private equity firm EQT Partners has owned VFS since May 2016. S&P’s B issuer credit rating on VFS reflects the pro forma capital structure after the CHF 116 million equivalent incremental term loan B issuance, which is largely leverage-neutral. The company intends to use the proceeds to partly repay CHF 116 million equivalent ($117 million) of its existing $191 million second-lien term loan.

“We expect VFS' credit metrics to be in line with our expectations for a B rating, with 2018 leverage in the range of 5.5x-5.8x,” S&P said in a news release. “Our rating on VFS' reflects its leading position in the visa application processing market.”

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