S&P revises Aecom recovery rating to 2

S&P said it revised its recovery rating for Aecom’s senior secured debt to 2 from 1, citing the company’s plans to upsize its revolver, add term loan debt, and extend credit facility maturities. The transaction is expected to lower recovery expectations for holders of the secured obligations to substantial at 70%-90%, with a rounded estimate of 75%, down from a very high 90%.

The amendment includes an increased $1.5 billion revolving credit facility from $1.15 billion and an upsized $750 million term loan A from $433 million with maturities moving to 2029 from 2026. The transaction also extends the maturity of term loan B to 2031 from 2028. Pro forma for the transaction, Aecom's secured debt obligations will increase to $2.95 billion. The company also has about $1 billion of senior unsecured debt due in 2027.

The increase in term loan A will add about $334 million in cash to its balance sheet, which the company plans to use for general corporate purposes. The company's revolving credit facility is undrawn.

The 5 recovery rating for Aecom's unsecured notes is unchanged, but recovery expectations are lower with a rounded estimate of 10%, down from 15%.

Aecom’s BB+ issuer credit rating and stable outlook are unchanged, S&P said.

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