S&P rates GI Chill loan B-

S&P said it assigned its B- corporate credit rating to GI Chill Acquisition LLC, the entity formed by the combination of California Cryobank Life Sciences and Cord Blood Registry. The outlook is stable.

At the same time, S&P said it assigned a B- issue-level rating and 3 recovery rating to the company's proposed first-lien credit facility, which consists of a $40 million revolving credit line due 2023 (undrawn at close) and a $410 million first-lien term loan due 2025.

The 3 recovery indicates an expectation for meaningful (50%-70%; rounded estimate: 60%) recovery for the first-lien debtholders in the event of default. S&P said it will not be rating the second-lien term loan upon the company's request.

“The ratings on GI Chill reflect the company's limited size and narrow business focus in the fragmented markets for cord blood and tissue storage and for reproductive cell and tissue (both sperm and egg), which are relatively small and have only moderate barriers to entry,” S&P said in a news release.

Partially offsetting these factors are the company's leading positions in all of its target markets, above-average profitability, potential cross-selling opportunities between the two combined businesses, predictability of the annuity-like revenue stream from the CBR business, and lack of exposure to government or managed care reimbursement in either segment, S&P noted.

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