S&P rates Progress Rail notes B-

Standard & Poor's said it assigned its B+ corporate credit rating to Progress Rail Services Holdings Corp.

At the same time, S&P assigned its B- rating to the proposed $200 million seven-year senior unsecured notes co-issued by two subsidiaries of Progress Rail, PRSC Acquisition Corp. and PMRC Acquisition Co. The outlook is stable.

Progress' business is currently owned by Progress Energy Inc. (BBB/negative/A-3) and is being acquired by One Equity Partners, an equity investor, along with the management of Progress.

Proceeds from the proposed issue of senior unsecured notes will be deposited in an escrow account pending the successful completion of the sale transaction. Once the acquisition is completed, PRSC and PMRC will be merged into unrated Progress Rail Services Corp. and unrated Progress Metal Reclamation Co.

S&P said the ratings on Progress reflect its aggressively leveraged balance sheet, modest margins, exposure to volatile scrap metal markets and dependence on class-1 railroads for close to half of revenues.

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