S&P raises ChampionX

S&P said it upgraded ChampionX Corp.’s issuer rating to BB+ from BB and the rating on its $625 million senior secured term loan to BBB from BBB-. The recovery rating on the company's term loan remains 1, indicating very high (90%-100%; rounded estimate: 95%) recovery if the company defaults.

The upgrade reflects the company repaying debt and keeping shareholder returns within cash flows, the agency said.

“During 2022, ChampionX simplified its capital structure and repaid approximately $100 million of outstanding borrowings on its credit facility. The company now has no maturities until the revolver in 2027 followed by the term loan in 2029, improving liquidity and freeing future cash flows. We expect ChampionX will continue returning at least 60% of free cash flow to shareholders through a combination of dividends and share repurchases, and that it will use any excess cash flow to enhance liquidity, which could support bolt-on acquisitions,” S&P said in a statement.

The outlook is stable.

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