S&P upgrades Avantor

S&P said it raised Avantor, Inc.'s issuer credit rating to B+ and removed the ratings from CreditWatch, where they were placed with positive implications May 3.

The outlook is positive, reflecting the potential for further de-leveraging and improved cash flow generation as Avantor expands and achieves synergies, the agency said.

Avantor completed an initial public offering May 16, issuing $2.9 billion in common equity and $900 million in mandatory convertible preferred shares.

On May 17, underwriters exercised the greenshoe option to issue an additional $434.7 million in common equity and $135 million in mandatory convertible preferred shares, the agency noted.

Avantor is using the proceeds to pay down $1.61 billion in debt and redeem $2.4 billion in senior preferred stock held by New Mountain Capital.

All junior preferred shares will convert to common equity, S&P said.

The upgrade reflects the improvement in adjusted net leverage to less than 7x after the IPO, the agency said.

The upgrade also considers an expectation that financial policy will become more conservative, S&P said.

The positive outlook reflects the potential for further de-leveraging and improving cash flow generation as Avantor expands and achieves synergies, the agency said.

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