S&P gives B to Element Materials loans

Standard & Poor's said it assigned its B long-term corporate credit rating to Element Materials Technology Group Holding CC2 Ltd.

The outlook is stable.

At the same time, the agency assigned its B issue rating to the $285 million first-lien term loan B and the $40 million revolving credit facility to be drawn by Element Materials Technology UK Holding Ltd. and guaranteed by Element, in line with its corporate credit rating. The recovery rating on the loan and the revolver is 3.

S&P said the rating reflects its assessment of Element's business risk profile as "fair" and its financial risk profile as "highly leveraged."

The assessment is based on Element's smaller scale in the global testing, inspection and certification industry and more limited geographical diversity compared with many of its peers, according to the agency. Nearly 80% of revenues come from the United States (although this is a large market).

S&P said Element provides services to a narrow group of sectors, primarily aerospace and oil and gas – and some transportation clients – giving it more-limited end-market diversity than larger, more-diverse peers.

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