S&P rates Five Star loans B, CCC+

S&P said it assigned a B issuer credit rating to Five Star Intermediate Holding LLC.

At the same time, S&P assigned B issue-level and 3 recovery ratings to Five Star Lower Holding LLC's first-lien credit facilities and a CCC+ issue-level and a 6 recovery rating to the company’s second-lien term loan.

The outlook is stable.

On March 21, The Jordan Co. agreed to acquire Five Star Holding Corp. for $1.537 billion. The current owners will maintain a 20% minority stake in Five Star following the close of the acquisition.

The Jordan Co. intends to fund the acquisition with a $100 million revolving credit facility (undrawn at close), a $630 million senior secured first-lien term loan and a $250 million senior secured second-lien term loan.

“The stable outlook reflects our expectation that the company will continue to benefit from favorable secular trends driving growth in its core end markets, continued conversions to laminated woven sacks (LWS), and the facilitation of its customer's sustainability initiatives,” S&P said in a news release.

“We also anticipate EBITDA margins will expand as contractual pass-throughs offset resin cost inflation. We forecast S&P Global Ratings-adjusted debt to EBITDA will improve to 6x by the end of 2022.”

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