S&P gives Cano add-on loan B-

S&P said it gave B- issue and 3 recovery ratings to Cano Health LLC’s planned $150 million incremental first-lien term loan due 2027. The 3 recovery rating indicates meaningful (50%-70%; rounded estimate: 50%) recovery in default. The recovery estimate is down from 60% due to the overall increase in the first-lien term loan outstanding.

The agency’s other ratings for Cano, including the B- ratings on its outstanding loans and CCC rating on its unsecured notes, are unchanged.

Cano is expected to use the proceeds to pay down the balance on its revolving credit facility, add to cash reserves and pay fees. The term loan has a payment-in-kind option at 14% for the first two years, reverting to 13% cash interest thereafter. “We view this financing as expensive but importantly providing more liquidity and financial flexibility,” S&P said in a press release.

The outlook is negative.

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