S&P gives HDT, loans B

S&P said it gave B ratings to HDT HoldCo Inc. and its planned $40 million revolving credit facility due 2026 and $280 million term loan B due 2027. The loans’ recovery rating is 3.

Nexus Capital is funding the acquisition of HDT with debt and equity. The initial borrower will be Highlander Merger Sub Inc., which will be merged with CB HDT Holdings Inc. at the close of the acquisition and then be renamed HDT HoldCo Inc. The revolver is expected to be undrawn at close.

“We expect debt to EBITDA to be in the mid-4x range in fiscal 2022 (fiscal year-end June 30, 2022), due to the relatively large amount of sponsor equity, and to improve further in fiscal 2023. However, we are uncertain of financial sponsor, Nexus Capital's plans for future acquisitions and dividends, which could result in leverage remaining weaker than our forecast,” S&P said in a press release.

The outlook is stable, but there is some uncertainty over Nexus’ plans for acquisitions or dividends, the agency said.

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