S&P gives RelaDyne, loan B

S&P said it gave B ratings to AIP RD Buyer Corp., the parent company of U.S.-based lubricant and fuel distributor RelaDyne Inc., and its planned $540 million first-lien term loan. The loan’s recovery rating is 3.

“RelaDyne has a narrow product focus in the highly fragmented and competitive lubricant and fuel distribution industry, and its products face cyclical demand. The company has elevated leverage and is 100% owned by private equity sponsor American Industrial Partners (AIP),” S&P said in a press release.

The issuer will use the term loan to refinance debt, in conjunction with RelaDyne's acquisition by financial sponsor American Industrial Partners from its previous owner Audax Group.

Besides the term loan, the company has a new $150 million asset-based lending facility, fully undrawn at close, and a privately placed $165 million second-lien term loan.

The outlook is stable, reflecting the forecast that the company's pro forma leverage will decline to the low-6x area in 2022 from around 7x in 2021 with free operating cash flow to debt above 5% as demand recovers to pre-pandemic levels.

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