S&P rates OneDigital loan B

S&P said it assigned a B issue rating to Achilles Acquisition LLC’s (OneDigital) proposed $75 million incremental first-lien term loan and $25 million delayed-draw term loan (available for 12 months) both due October 2025. The agency also assigned a recovery rating, indicating an expectation of meaningful recovery (50%) in the event of default.

The new financing will have similar terms to the existing first-lien term loan, though both facilities will be non-fungible.

OneDigital will use the proceeds to pay down the $20 million of revolver drawn and to put cash on the balance sheet for future acquisitions.

“The company’s leverage in the 12 months ended March 31, 2020, pro forma for the financing, was about 7.9x, elevated for the current rating level. As the company uses proceeds for acquisitions over the next year, leverage should improve, but this could be offset if revenue or earnings deteriorate in light of the potential for weakened operating conditions,” S&P said in a press release.

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