S&P gives reorganized Service King CCC+

S&P said it assigned CCC+ ratings to New SK Holdco (Service King) and its new senior secured credit facilities, consisting of an $803 million first-lien term loan and a $57 million cash flow revolver. The recovery rating on the loans is 4 (30%-50%, rounded estimate: 40%). The outlook is negative.

“Service King is emerging from restructuring following multiyear operational and capital structure challenges that led to its predecessor's selective default. Over the last few years, management missteps and significantly reduced collision volumes impacted by the Covid-19 pandemic and parts shortages led to poor operational performance and a major deterioration in margins,” S&P said in a press release.

The negative outlook reflects the view that the company could have trouble passing higher labor costs to price-sensitive insurers, the agency said.

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