S&P rates Olympus Water notes B-, CCC+, loan B-

S&P said it assigned its B- issue-level ratings to Olympus Water Holdings IV LP’s proposed $1.4 billion senior secured term loan and new $1.4 billion senior secured notes. The 3 recovery rating indicates an expectation of meaningful (50-70%; rounded estimate: 55%) recovery in the event of a payment default.

At the same time, S&P assigned a CCC+ issue-level rating to the proposed new $1 billion unsecured notes. The 5 recovery rating indicates an expectation of modest (10-30%; rounded estimate: 15%) recovery in the event of a payment default.

The outlook is stable.

Olympus Water Holdings IV will use proceeds to fund the acquisition of Solenis UK International Ltd. by private equity firm Platinum Equity from Clayton, Dubilier & Rice (CD&R) and BASF. Olympus, owned by Platinum Equity, is a holding company for Solenis and Sigura Water, an existing Platinum Equity portfolio company. Platinum acquired Sigura in 2019.

“Our ratings reflect our view that recently formed Olympus will be highly leveraged, with debt to EBITDA expected in the 6.5x-7x range over the next 12 months. Our rating also reflects the company's private equity ownership by Platinum Equity, which in our opinion leads to more aggressive financial policies,” S&P said in a news release.

“Furthermore, we view the company's expected average EBITDA margins as indicative of its weak market position and competitive end markets.”

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