S&P rates Watlow add-on B

S&P said it assigned its B issue-level rating and 3 recovery rating to Watlow Electric Manufacturing Co.'s planned $175 million non-fungible incremental first-lien term loan. The 3 recovery rating indicates meaningful (50%-70%; rounded estimate: 60%) recovery in default. The ratings are the same as the agency’s on the company’s outstanding loans.

Watlow also plans to upsize its revolving credit facility by $22.5 million, to $72.5 million.

“Our B issuer credit rating and stable outlook on Watlow are not affected by the acquisition because we previously incorporated an acquisition of this size in our base-case forecast. We also continue to forecast that the company's S&P Global Ratings-adjusted leverage will remain at least a turn below our 6.5x downgrade threshold over the next several quarters,” S&P said in a press release.

The company plans to use the loan and balance sheet cash to buy Eurotherm from Schneider Electric, as well as to pay related transaction fees and expenses.

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