S&P rates TEG, loan B

S&P said it assigned preliminary B ratings to TEG Pty Ltd. and its proposed A$404 million (U.S. $285 million) first-lien term loan B with a recovery rating of 3, reflecting meaningful (50%-70%; rounded estimate: 65%) recovery prospects in a payment default.

The agency also assigned a CCC+ preliminary issue rating to TEG’s A$162 million (U.S. $100 million) second-lien term loan B with a recovery rating of 6, reflecting minimal (0%-10%) recovery prospects in a payment default.

“TEG’s highly leveraged capital structure is a constraint on the rating. We expect proforma S&P Global Ratings-adjusted leverage to be at the 5x range over the next two years after the sale of TEG to financial sponsor Silver Lake Partners. Given TEG’s international growth strategy, we do not expect meaningful deleveraging over the intermediate term given that TEG will utilize earnings to invest in growth opportunities,” said S&P in a press release.

The outlook is stable.

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