S&P upgrades WEC, rates loan B+

S&P said it raised its issuer rating for WEC US Holdings Ltd. (Westinghouse) to B+ from B and assigned B+ issue-level and 3 recovery ratings to the company’s planned $3.5 billion first-lien term loan due 2031.

“Our rating on Westinghouse reflects the company's ability to compete in the specialized nuclear fuel and equipment markets as well favorable secular trends in the nuclear industry. Westinghouse is a leading fuel assemblies and components provider in approximately 35% of nuclear reactors worldwide with capabilities to serve 85% of the total operating fleet spanning across all 35 licensed countries.

“We view WEC's scale and competitive position as stronger among its rated peers, but its participation in a single-end market, higher fixed-cost nature of its business, and moderate customer concentration serve as partial offsets,” S&P said in a press release.

The company plans to secure the term loan and an unrated $275 million revolver due 2029. It will use the proceeds to repay the $3.45 billion in first-lien and incremental term loans due 2025 and pay associated fees and expenses.

“While we view the debt refinancing as relatively neutral from a credit metrics perspective, leverage remains elevated. The refinancing transaction will add about $50 million of debt to Westinghouse's balance sheet, primarily due to transaction fees and expenses. However, for the period ended Sept. 30, 2023, the company's leverage was about 6.4x, and we do not anticipate this to improve significantly over the next couple of quarters as the company continues winding down its D&D business and given previous restructuring charges will roll off gradually,” S&P said.

The outlook remains stable.

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