S&P cuts Asplundh, rates loan BBB-

S&P said it downgraded Asplundh Tree Expert, LLC’s issuer rating to BB+ from BBB- and rated its incremental $1 billion term loan BBB- with a 1 recovery rating. The 1 rating reflects very high (90%-100%; rounded estimate: 90%) recovery in default.

“The downgrade reflects Asplundh's new 3x-3.5x leverage target which represents an appetite for modestly more financial risk than we previously expected. Asplundh redesigned its strategy to enhance revenue growth by making acquisitions in adjacent markets. Its intention to commit more capital to mergers and acquisitions (M&A), evidenced by the sizable outlay for the current acquisition, highlights a change in its financial policy,” S&P said in a press release.

Asplundh will use the loan to fund an acquisition, pay down its revolver balance and for general corporate purposes.

The outlook is stable.

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