S&P assigns B to LSF12 Badger, loans

S&P said it assigned B ratings to LSF12 Badger Bidco LLC and its planned first-lien debt. The recovery rating on the debt is 3. The outlook is stable.

Lone Star Funds is acquiring LSF12 Badger Bidco LLC, the parent of Centromotion. The deal is expected to close in the third quarter of 2023. The financing will consist of a $100 million revolving credit facility, undrawn at close, due 2028 and a $450 million first-lien term loan due 2030. The company will also issue $75 million in new preferred equity at a holding company.

“CentroMotion continues to demonstrate solid operating performance and favorable end-market dynamics despite a lackluster macroeconomic environment. Over the past two years, the company has been able to generate positive sales growth and incremental margin improvement in nearly every quarter subsequent to the combination. For the past 12-month (LTM) period ended March 31, 2023, the company generated organic sales growth of about 13% and S&P Global Ratings-adjusted EBITDA margin improvement of nearly 250 basis points (bps),” S&P said in a press release.

The agency said, however, it sees the company’s leverage will remain high.

“The stable outlook reflects our view that the company will continue demonstrating solid operating performance and generating positive free operating cash flow (FOCF), enabling it to reduce its S&P Global Ratings-adjusted debt to EBITDA in the low- to mid-5x range over the next 12 months,” S&P said.

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