S&P rates Rand BB-, loans, notes BB

S&P said it assigned Rand Parent LLC, the new parent of Atlas Air Worldwide Holdings Inc., a BB- issuer rating and BB ratings to its planned term loan, revolver and senior secured notes. The outlook is stable.

Apollo Global Management Inc. is buying Atlas Air through Rand and will use an $800 million senior secured term loan B, $800 million in senior secured notes, $878 million in preferred equity, and $1.5 billion in common equity, as well as about $1.6 billion in rolled debt. The transaction will also include a $300 million revolving credit facility, which is expected to be undrawn at close.

“We expect Atlas's credit metrics to remain relatively stable through 2024. We expect capital spending to remain relatively high at about $600 million to $700 million in 2023, as Atlas takes deliveries of the remaining Boeing 747-8Fs and Boeing 777Fs on order, before declining to close to maintenance levels in 2024. We expect the company's operating performance to remain relatively stable through 2024, due in part to higher capacity (associated with the new aircraft in the fleet), offset somewhat by a moderation in pricing as new and renewed contracts price at lower levels (compared with the highs of 2020 and 2021),” S&P said in a press release.

The agency said it estimates Rand’s FFO to debt in the 15%-20% range in 2023 and 2024. FOCF to debt is expected to be close to breakeven in 2023, before improving to about 10% in 2024 with lower capital expenditures.

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