S&P cuts Convergint Technology loan

S&P said it lowered Convergint Technology Group Holdings LLC's senior secured first-lien debt rating to B- from B and revised its recovery rating to 3 from 2 on the company's planned $175 million incremental first-lien term loan.

The new issue will be fungible with Convergint's existing $327 million incremental debt. The 3 recovery rating indicates meaningful recovery (50%-70%; rounded estimate: 65%) on the combined $1.8 billion first-lien term loan.

“We revised our recovery rating on the company's first-lien debt to reflect the lower recovery prospects for its lenders in our simulated default scenario due to the increased amount of priority debt in its capital structure following the proposed transaction. Our 6 recovery rating on Convergint's second-lien debt is unchanged, indicating our expectation for negligible (0%-10%; rounded estimate: 0%) recovery for unsecured lenders in the event of a payment default,” S&P said in a press release.

The company will use the new loan to pay down $99 million of borrowings on its $200 million revolver, fund ongoing and future acquisitions and for general corporate purposes.

The outlook is stable.

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