S&P rates Railworks, notes B

S&P said it gave Railworks Holdings LP and its planned $325 million of senior secured notes B ratings. The recovery rating on the notes is 3, indicating an expectation for meaningful recovery (50%-70%; rounded estimate: 50%) in default.

Railworks is being bought by Bernhard Capital Partners and the note proceeds will be used to partly fund the transaction.

“Pro forma for the transaction, we anticipate Railworks' S&P Global Ratings-adjusted debt to EBITDA will increase to about 5x in 2021.We assume the company increases its revenue this year and next on contracted higher-margin major project work from its sizeable backlog of projects, in addition to recurring maintenance work. We also expect that the ongoing trend toward outsourcing the discretionary and non-discretionary maintenance of rail infrastructure will bolster its revenue over the next few years,” S&P said in a press release.

The outlook is stable.

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