S&P rates Discovery Energy, loan B

S&P said it assigned B ratings to Discovery Energy Holdings IV LP (Kohler Energy) and its planned $1.625 billion term loan. The outlook is stable.

Platinum Equity, through Discovery Energy, will buy a majority stake in Kohler Co.'s energy division. Platinum will use the term loan, $1.365 billion of equity contributed by Platinum, and $429 million of rolled equity contributed by Kohler Corp. The planned capital structure also includes a $400 million asset-based lending facility, which is expected to be modestly drawn at close to fund added cash to the balance sheet.

“We forecast Kohler Energy's S&P Global Ratings-adjusted leverage to be in the mid-4x area and for its S&P Global Ratings-adjusted interest coverage to be in the mid-2x area in 2024. Nevertheless, Kohler Energy's S&P Global Ratings-adjusted EBITDA margin is low (at about 10%) relative to higher-rated peers, and the company has only a limited track record of achieving these margin levels,” S&P said in a statement.

The agency said, “The stable outlook on Discovery Energy reflects our forecast for EBITDA generation in 2024 that will support S&P Global Ratings-adjusted leverage in the mid-4x area, adjusted interest coverage in the mid-2x area, and good levels of free operating cash flow (FOCF).”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.