S&P gives Ahead DB add-on B

S&P said it assigned B issue-level and 3 recovery ratings to Ahead DB Holdings LLC’s planned $600 million incremental term loan. The agency concurrently lowered the first-lien debt rating to B from B+ and revised the recovery rating to 3 from 2. S&P also revised the outlook to negative from stable and affirmed the B issuer rating.

Ahead DB agreed to acquire Computer Design & Integration (CDI) and use the incremental $600 million term loan B, as part of its plan for funding the transaction.

“We expect the incremental debt to strain Ahead's credit metrics. There was already limited cushion at the current rating and this transaction could erode current recovery expectations that first lien lenders could expect in our recovery analysis. However, we expect the company's leverage will fall gradually over fiscal 2024 as IT budgets expand, spending reaccelerates, and the company begins to benefit from cost synergies,” S&P said in a press release.

The negative outlook reflects a forecast for the company’s “very high” S&P Global Ratings-adjusted leverage and that it may not retreat below 6.5x for 12 months after the deal closes, the agency said.

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