S&P assigns Groundworks, facility B

S&P said it assigned B ratings to Groundworks LLC (Proof Topco LLC) and its planned revolver and first-lien credit facility. The recovery ratings on the loans are 3, indicating average (50%-70%; rounded estimate: 50%) recovery in the event of a payment default. The outlook is stable.

The facility will consist of a $65 million revolving credit facility, an $815 million first-lien term loan and a $150 million delayed-draw term loan.

“With just over $1 billion of sales across its 21 local brands in 34 states, the company is the largest player in the niche U.S. residential foundation repair and water management industry. It provides critical housing repair services, primarily foundation repair, as well as basement waterproofing, crawl space encapsulation, and concrete lifting. The demand for these services tends to be less exposed to economic downturns considering the importance of these repairs in maintaining the value of a consumer's investment in their home.

“However, some consumers could opt for cheaper local alternatives or delay their projects until a critical repair is needed, which would likely increase the cost of the project,” S&P said in a press release.

The company will use the new term loan and delayed-draw term loan to refinance its outstanding term loan and delayed-draw loan.

S&P said it expects Groundworks’ services will continue to grow in the low-single-digit percent area over the next 12 months.

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