S&P gives Parts Authority, loan B

S&P said it assigned B ratings to Parts Authority (PAI Holdco Inc.) and its planned $600 million first-lien term loan. The loan’s recovery rating is 3. The company’s proposed $125 million asset-based lending facility and $200 million second-lien term loan are unrated.

Private equity firm Kohlberg & Co. is acquiring Parts Authority. The company’s total funded debt as of the transaction’s close will be about $800 million, representing a significant increase in funded debt relative to fiscal-year 2019 levels of about $450 million, S&P said.

“Therefore, we expect the company’s initial post-transaction S&P-adjusted debt to EBITDA to be high at about 7x. However, we forecast that the expansion of EBITDA will improve leverage by slightly more than one turn, to below 6x, by the end of 2021,” S&P said in a press release.

The outlook is stable.

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