S&P raises Parkland notes to BB

S&P said it upgraded the ratings on Parkland Corp.’s senior unsecured notes to BB from BB- and revised the recovery rating to 4 (30%-50%, rounded estimate: 30%) from 5. The 4 recovery rating indicates average recovery in default.

The upgrade follows Parkland's announcement it will acquire 100% of Sol Investments SEZC in exchange for 20 million common shares of Parkland. The agency said it previously assumed that the 25% stake would be acquired entirely with debt and had incorporated that into its recovery analysis through a 100% on the revolver.

“However, given the equity transaction, we are now applying our default assumption of 85% draw on the cash flow revolver in an event of default as opposed to our prior assumption of a 100% draw. The raised issue-level rating and revised recovery rating are a result of higher enterprise value available to unsecured debt holders,” S&P said in a press release.

Citing its estimate for the equity deal and higher EBITDA than it had previously expected, S&P said it sees Parkland ending 2022 with debt to EBITDA of 3.7x-3.8x compared with about 4.5x (pro forma the acquisitions) as of last 12 months to June 30.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.