S&P gives B- to Aramsco, loans

S&P said it gave B- ratings to Aramsco Inc. and its planned senior secured $430 million first-lien term loan and delayed drawn term loan, with $75 million undrawn at close. The 3 recovery rating indicates meaningful (50%-70%; rounded estimate: 55%) recovery in default. The outlook is stable.

American Securities is buying Aramsco.

“Our B- rating reflects Aramsco's limited end-market diversity in a fragmented and highly competitive industry. We believe one of Aramsco's strengths is its network of over 80 distribution centers across the U.S. and Canada that enables just-in-time delivery of key supplies and equipment to specialty contractors doing restoration, remediation, abatement, surface preparation, stone care, or specialized facility maintenance jobs.

“We forecast revenue will consistently grow organically above U.S. GDP in the low-single-digit percent area because about half of Aramsco's sales are in end markets resilient in economic downturns, particularly damages restoration, specialized facility maintenance, and traffic safety services and products,” S&P said in a press release.

The agency said it estimates Aramsco’s S&P Global Ratings-adjusted leverage above 7x pro forma the transaction and to stay in the 7x area through 2024. The buyout adds leverage to Aramsco's capital structure with the new larger term loan. We believe the company will draw on the delayed-draw term loan to fund acquisitions over the next two years.”

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