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S&P assigns B to A-Gas, loan
S&P said it preliminarily assigned B ratings to A-Gas intermediate parent company Arthur Midco Ltd. and to its planned $520 million term loan B; the loan’s preliminary recovery rating is 3. The outlook is stable.
Private equity firm TPG agreed to buy a controlling stake in the company. The planned issuances comprise a seven-year senior secured term loan B and a $60 million revolving credit facility. The proceeds will be used to fund the buyout, pay the transaction fees, and repay the existing secured loans of about £260 million. There is no rolled-over debt in the capital structure, save for about £23 million of lease liabilities.
“We assume A-Gas will generate high profitability thanks to its leading market position in a specialized industry. The company holds top market positions in the specialized and niche gas reclamation market, where technical know-how, service, and proximity to customers are key. The good technical capabilities in the gas separation process allow the company to run its operations efficiently–which we note in the high yields of 95% from recovered gases–and helps it to generate high profitability.
“The company's EBITDA margin tends to stay at 18%-22%, and we anticipate improvements over the rest of 2023 and in 2024, benefiting from a higher proportion of revenue from the company's circular economy segment, which includes reclaim products, services, and the sale of carbon credits that are produced during the normal course of the gas reclamation process,” S&P said in a statement.
The agency said it expects forecast S&P Global Ratings-adjusted leverage of 5x-5.3x on the closing of the deal and in 2024 moderating to 4x-4.5x in 2024.
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