S&P rates Bayer Environmental B-

S&P said it assigned preliminary B- ratings to Bayer Environmental Science (Discovery Guarantor 2 Ltd.) and its planned first-lien credit facilities, which include a revolving credit facility and a term loan, with a recovery rating of 3 (rounded estimate: 60%). Additionally, the agency gave a CCC issue-level rating to the proposed second-lien term loan, with a recovery rating of 6 (rounded estimate: 0%). The outlook is stable.

Private equity firm Cinven agreed to buy Bayer AG’s environmental science business in a deal expected to be valued at $2.6 billion.

“We view the initial capital structure as highly leveraged, with adjusted debt to EBITDA of 7x-8x over the next 12 months. We expect credit measures to gradually improve as planned cost-reduction initiatives improve the company's cost base, supported by steady revenue growth due to continued good demand in North America and improving leverage within that range. We do not anticipate significant deleveraging soon given the expectation of aggressive financial policies linked with financial sponsor ownership,” the agency said in a press release.

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