S&P assigns B to Ahab Finance 2, loans

S&P said it assigned B ratings to Ahab Finance 2 Ltd. and its new $600 million senior secured credit facility. The recovery rating on the facility is 3. The 3 recovery rating indicates meaningful (50%-70%; rounded estimate: 65%) recovery for lenders if the issuer defaults. The outlook is stable.

L. Catterton agreed to buy a majority stake in river cruise operator AmaWaterways SCS. It will use Ahab as its vehicle. The company will fund the deal with the $600 million senior secured credit facility, comprising a $75 million revolving credit facility due 2029 and a $525 million term loan B due 2031, along with balance sheet cash and an equity investment from L Catterton.

“The B issuer credit rating reflects the high degree of competition in the European river cruise market, as well as AmaWaterways' limited scale and diversity, lack of brand awareness, and financial-sponsor ownership. Despite our expectation the company's leverage will be in the 3x-4x range through 2024, we view L Catterton's majority ownership as a financial risk because we believe financial-sponsor owners frequently engage in debt-financed acquisitions, investments, or shareholder returns.

“However, AmaWaterways' good market position in the premium and luxury river cruise segments, good revenue visibility (given its long booking windows), and our view that its affluent target customer base is more resilient than mass-market customers somewhat offset these risks,” S&P said in a statement.

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