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S&P lowers Blount, rates new loan B+
Standard & Poor’s said it assigned a B+ corporate credit rating to Blount International Inc.
The agency also said it assigned a B+ rating and 3 recovery rating to Blount’s proposed $550 million senior secured credit facilities, which comprise a $75 million revolver due 2021, $300 million term loan due 2023 and $175 million equivalent euro-denominated term loan due 2023.
The 3 recovery rating indicates 50% to 70% expected default recovery.
S&P also said it lowered the corporate credit rating on wholly owned subsidiary Blount Inc. to B+ from BB- and removed all of its ratings from Credit Watch with negative implications, where they were placed in December.
S&P also said it lowered the ratings on Blount Inc. and co-borrower Omark Properties Inc.’s $600 million senior secured credit facilities to B+ from BB-. The 3 recovery rating is unchanged, indicating 50% to 70% expected default recovery.
The outlook is negative
Private-equity sponsors American Securities LLC and P2 Capital Partners LLC are acquiring Blount International, S&P said.
The downgrades reflect an expectation that the company’s debt-to-EBITDA leverage metric will increase to nearly 5x in 2016 due to the proposed acquisition, S&P said.
The negative outlook reflects the challenging operating environment that the company is facing due to weakness in its agriculture-related end markets and headwinds from the stronger U.S. dollar, the agency said.
The company’s covenant headroom also will exceed 15% over the next 12- to 18-months, S&P said.
The downgrades also consider the company’s new private-equity ownership and aggressive financial policies, the agency added.
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