S&P gives Encino notes B

S&P said it gave Encino Acquisition Partners LLC’s planned $700 million of unsecured notes due 2028 B with 2 recovery ratings. The 2 rating indicates an expectation for substantial (70%-90%, rounded estimate: 85%) recovery in default.

Encino plans to use the proceeds to redeem its $549 million second-lien term loan and partially repay the $485 million of borrowings on its $900 million revolving credit facility.

The agency affirmed Encino’s B- rating and revised the outlook to stable from negative. “The stable outlook reflects our expectation that Encino will maintain adequate liquidity and credit measures in line with the current rating, including FFO to debt of at least 30% over the next 24 months. We believe production will grow over the long run and anticipate a modest cash outflow this year, with meaningful free operating cash likely to be generated in 2022,” S&P said in a press release.

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