S&P gives V2X, loan B+

S&P said it gave B+ ratings to V2X Inc. and its planned incremental $260 million term loan. The agency also hiked the issue-level rating on the $925 million first-lien term loan outstanding to B+ from B and revised the recovery rating to 3 from 4. The 3 rating indicates an estimated 55% recovery in default up from an estimated 45%.

Vectrus Inc. and Vertex Aerospace Services Corp. reported an all-stock merger to create a combined company to be named V2X Inc. after the transaction closes. Vertex Aerospace Services’ debt capital structure remains in place along with the addition of the incremental $260 million loan and an asset-based lending facility upsized to $200 million from $100 million, the agency said.

“We believe that V2X will benefit from the combined capabilities of Vectrus and Vertex due to its expanded operating scale and its combined contract mix. Vectrus' focus is facility and base operations support, information technology and supply chain logistics and Vertex specializes in higher-margin areas including aerospace and aviation lifecycle support, system and platform management, and training solutions,” S&P said in a press release.

The agency said it forecasts V2X's debt to EBITDA to be near 4.8x in 2022 before decreasing to the low-4x area in 2023.

The outlook is stable.

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