S&P rates Summit Materials notes BB-

S&P said it assigned a BB- rating to Summit Materials LLC's and Summit Materials Finance Corp.'s proposed $300 million senior unsecured notes due in 2025.

The 4 recovery rating indicates 30% to 50% expected default recovery.

The proceeds will be used for general corporate purposes and to fund potential future acquisitions, S&P said.

The rating on the notes is the same as the company's corporate credit rating.

S&P said it assessed recovery prospects on the basis of a reorganization value of about $1.3 billion derived from projected EBITDA at emergence of $220 million, which was $15 million higher than a previous valuation.

The increase in the assumed recovery value reflects the incremental EBITDA generation anticipated, which will be provided by Summit's acquisitions and captures a rebound in profitability following the sharp cyclical downturn contemplated by the default scenario, the agency explained.

S&P also said it affirmed the ratings on the rest of Summit's capital structure, including its BB+ rating on the company's $650 million term loan due in 2022 and BB- ratings on its $250 million unsecured notes due in 2022 and $625 million senior unsecured notes due in 2023.

The recovery rating on the term loan remains at 1, indicating 90% to 100% expected default recovery.

The recovery rating on the senior unsecured notes remains at 4, indicating 30% to 50% expected default recovery.

The BB- corporate credit rating and positive outlook are unchanged, S&P added.

The ratings reflect the company's aggressive financial risk profile and satisfactory business risk profile, the agency said.

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