S&P ups recovery on Butler Animal Health loan to 2

Standard & Poor's said it revised its recovery rating on Butler Animal Health Supply LLC's senior secured first-lien debt, following the company's announcement of a $20 million add-on to its term loan B.

The loan rating on the first-lien debt was affirmed at B, at the same level as the B corporate credit rating on Butler and the recovery rating was revised to 2 from 3, the agency said.

The agency added that the revision is based on the increase in debt from the add-on, which would increase the pace of a potential insolvency under our hypothetical default scenario and, therefore, leave the company with a higher emergence EBITDA value than if it were to default at a later time.

Butler also announced a $30 million add-on to its second-lien term loan and S&P said that the loan rating on the second-lien debt was affirmed at CCC+ and the recovery rating was affirmed at 5.

The outlook is stable.

The B corporate credit rating reflects Butler's relatively small EBITDA base, which leaves limited cushion for operating challenges, a highly leveraged financial profile stemming from a heavy debt load and some concentration in vendors and pharmaceutical sales, S&P said, noting that these factors are somewhat mitigated by the company's position as the largest distributor in the niche companion animal health care supply industry and its diversified customer base.

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