S&P rates Duravant add-on B-

S&P said it assigned B- issue-level and 3 recovery ratings to Engineered Machinery Holdings Inc.'s (Duravant) planned $1.14 billion incremental first-lien term loan due 2028. The 3 recovery rating indicates an expectation for meaningful recovery (50%-70%; rounded estimate: 60%) in default.

The CCC+ issue level and 5 recovery ratings on the company's second-lien term loan due 2029 are unchanged by the company's proposed $375 million add-on, the agency said. The 5 recovery rating indicates an expectation for modest recovery (10%-30%; rounded estimate: 10%) in default.

Duravant plans to use the proceeds to refinance its $999 million first-lien term loan due 2024 and its $266 million second-lien term loan due 2025. It will also pay a $275 million shareholder distribution to its financial sponsor, Warburg Pincus.

“While the proposed debt issuance will modestly increase 2021 leverage, we expect Duravant to demonstrate solid operating performance and generate decent free cash flow over the next 12 months,” S&P said in a press release.

The B- issuer rating is unchanged, and the outlook remains stable, the agency said.

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