S&P rates Newport loans B

S&P said it assigned its B issuer credit rating to Badger Merger Sub Inc. (d.b.a. Newport Group).

The outlook is stable.

At the same time, S&P assigned a B issue-level rating and 3 recovery rating to the company's proposed $30 million secured revolving credit facility due 2023 and $240 million term loan due 2025. The 3 recovery rating indicates an expectation for meaningful recovery (50% to 70%, rounded estimate: 60%) in the event of a payment default. S&P does not rate the second-lien term loan.

“The rating on Newport Group reflects its high leverage, with our expectation that debt to EBITDA will exceed 6x in 2018, along with the company's small scale despite having a relatively solid position within the growing outsourced employee services market,” S&P said in a news release.

“The rating also reflects our view that the company has stable operating performance prospects for 2018, with good revenue visibility from recurring revenues and its recent partnership with Vanguard (that provides comprehensive administration to Vanguard's non-qualified plan clients).”

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