S&P assigns CPI International loan CCC+ rating

Standard & Poor’s said it assigned its CCC+ issue-level rating and 6 recovery rating to CPI International Inc.’s new $28 million second-lien term loan due November 2017. The 6 recovery rating indicates an expectation of negligible recovery (0%-10%) in a default scenario.

At the same time, S&P affirmed the B issue-level rating on the company’s existing $340 million first-lien credit facility, which includes a $310 million term loan and a $30 million revolver. The 3 recovery rating on the facility is unchanged, indicating an expectation for meaningful (50%-70%; upper half of the range) recovery.

S&P also affirmed the CCC+ issue-level rating on the company’s existing $215 million unsecured notes due 2018. The 6 recovery rating on the notes is unchanged, indicating an expectation of negligible recovery (0%-10%) in a default scenario.

“Our ratings on CPI reflect the company’s high debt levels, which stem from the aggressive financial policies of its private-equity sponsor Veritas Capital, its small scale, and its narrow scope of operations. We also consider the company’s dominant niche market positions, good end-market diversity, positive cash generation, and ‘adequate’ liquidity,” S&P said in a news release.

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