S&P assigns Midcoast B, loan B+

S&P said it assigned a B issuer rating to Midcoast (East Texas) LLC and B+ and 2 recovery ratings to its planned $400 million term loan B due 2028. The 2 recovery rating indicates an expectation for substantial (70%-90%; rounded estimate: 70%) recovery in default. The company also plans to secure an unrated four-year $25 million revolver.

“Our B issuer credit rating on Midcoast East Texas reflects its limited scale and contract portfolio that mainly comprises acreage and wellbore dedication contracts with tangible commodity price exposure,” S&P said in a press release.

The company will use the proceeds to repay its $100 million term loan due June 2022 and distribute up to $280 million to its owner, ArcLight Capital Partners

The outlook reflects a forecast that Midcoast’s S&P Global Ratings-adjusted debt to EBITDA will be under 4x during the next two years as it increases its EBITDA by the mid-single digit percent area, S&P said.

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