S&P assigns B to AmeriTex, notes

S&P said it assigned B ratings to AmeriTex Holdco Intermediate LLC and its planned $530 million of senior secured notes due 2028. The outlook is stable.

“The company's small scale and concentrated geographic footprint are only partially offset by its strong position within its target markets. We believe AmeriTex's small scale ($320 million revenue in 2022) concentrated geographic footprint (located almost entirely in Texas), and limited product breadth to precast products indicate some credit risks. We believe that compared to larger, higher-rated peers, smaller and less diverse companies like AmeriTex are more susceptible to volatility during periods of economic stress,” S&P said in a press release.

AmeriTex plans to use the notes to refinance a portion of its borrowings under its revolving credit facility of $85 million and $287 million term loan and issue a one-time dividend of about $70 million. As part of this transaction, the company also plans to issue a $105 million asset-based lending facility due 2028.

“Pro forma for this transaction, we expect S&P Global Ratings-adjusted leverage will be 5x, improving toward 4x over the next 12 months,” the agency said.

The stable outlook captures a forecast for EBITDA interest coverage of 2x-3x and debt to EBITDA of 4x-5x over the next 12 months, S&P said.

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