S&P raises Secure Energy Services

S&P said it upgraded its ratings for Secure Energy Services Inc. to B+ from B, its senior secured second-lien notes to BB from BB- and its senior unsecured notes to BB- from B+.

“The upgrade reflects our expectation for materially improved financial measures, led by gross debt reduction. Secure recently closed its previously announced asset sale to Waste Connections (BBB+/stable) for C$1.075 billion. The asset sale follows Secure's merger with Tervita Corp., which closed on July 2, 2021, and the subsequent order by the Competition Tribunal to divest certain facilities. We expect Secure to use a portion of the proceeds to pay down the credit facility (C$400 million outstanding as of Sept. 30, 2023) and repay the remaining outstanding second-lien senior notes in 2024 (about C$220 million outstanding as of Sept. 30).

“We believe the material reduction in debt (about 65% lower gross debt relative to year-end 2023) will more than offset the loss in EBITDA from these divestitures (C$154 million for the 12 months ended Sept. 30). Accordingly, we project adjusted FFO to debt to average about 60% and debt to EBITDA close to 1.5x over the next two years,” S&P said in a press release.

The outlook is stable.

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