S&P rates Chart loan, notes B+, notes B

S&P said it assigned B+ ratings to Chart Industries Inc. and its new $1.315 billion senior secured term loan, and $1.31 of billion secured notes. The recovery rating on the debt is 3. The agency also rated Chart’s $750 million of senior unsecured notes B with a 5 recovery rating. The outlook is stable.

Chart agreed to buy Granite U.S. Holdings Corp. (Howden) from KPS Capital Partners. The deal is expected to close in the first half of 2023. Chart plans to use the loan, the notes and $1.1 billion of preferred equity to fund the acquisition.

“Following the acquisition, Chart will have increased scale and scope of operations, moderate customer concentration, and broad geographic diversity. With the acquisition of Howden, coupled with secular growth trends, we expect Chart's sales to reach the $4 billion area on a pro forma basis in 2023. In our opinion, the breadth of operations will compare very favorably to similarly rated peers,” S&P said in a press release.

The agency said it forecasts Chart will deliver strong positive free operating cash flow, and synergies from the deal resulting in adjusted leverage in the 6x-7x range.

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