S&P raises Sabert loan to B+

S&P said it raised its rating for Sabert Corp.’s first-lien term loan due 2026 to B+ from B and revised the recovery rating to 2 (70%-90%; rounded estimate: 70%) from 3 (50%-70%; rounded estimate: 55%).

The agency concurrently affirmed Sabert’s B issuer rating and revised the outlook to positive from stable.

“In 2022, Sabert generated $76 million of discretionary cash flow (DCF), which it used, in part, to reduce its first-lien term loan by $93 million. In the first nine months of the year, the company generated $82 million of DCF and reduced its first-lien term loan by an additional $90 million. In addition to its DCF, Sabert has used borrowings from its asset-based lending (ABL) facility and related party loans to repay its higher-interest first-lien term loan, effectively reducing its interest expense,” S&P said in a press release.

As of Sept. 30, the company shaved its total reported debt to $561.7 million from $707.3 million as of the beginning of 2022, which cut its leverage below 3x.

“The positive outlook reflects the company's strong earnings growth and cash generation, which it used to repay debt and reduce its leverage. Our forecast assumes Sabert will continue to generate ample free cash flow and maintain leverage of between 3x-3.5x over the next 12 months,” S&P said in a press release.

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