S&P rates DXP loan B

S&P said it assigned its B issue-level and 3 recovery ratings to DXP Enterprises Inc.'s planned $550 million senior secured term loan B due 2030. The 3 recovery rating indicates meaningful (50%-70%; rounded estimate: 55%) in default.

“The proposed term loan does not affect our B issuer credit rating or stable outlook because it does not impair our forecast for the company's S&P Global Ratings-adjusted leverage to remain comfortably below our downside ratings threshold of 7x through 2023,” S&P said in a statement.

DXP intends to use the proceeds to fully repay its roughly $426 million senior secured term loan due 2027 and add cash to the balance sheet to pre-fund tuck-in M&A that are committed or under letters of intent, and to pay associated fees and expenses.

Additionally, “We continue to monitor the company's progress in addressing its reported material weaknesses in internal controls, which it expects to last through 2023. We believe DXP is making progress in addressing the issues, given it has switched auditors and appointed a new chief accounting officer,” S&P said.

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