S&P cuts ContourGlobal

S&P said it downgraded ContourGlobal plc to BB- from BB. Concurrently, the agency lowered subsidiary ContourGlobal Power Holdings to BB- from BB, based on the guarantee from ContourGlobal. S&P also trimmed rating on the senior secured debt at the subsidiary to BB from BB+. The recovery rating on this debt remains 2.

“We expect S&P Global Ratings-adjusted leverage will be elevated following the completion of the acquisition of WG Partners Acquisition LLC's despite planned deleveraging in the short term,” S&P said in a press release.

The company paid total cash consideration to the seller of $661 million, including $34 million of fees. ContourGlobal funded it through a combination of a $175 million bridge loan, $320 million of new debt, as part of the $872 million of senior secured notes issued in December, and $167 million cash on hands.

“We expect the leverage and interest coverage ratios to range between 4.5x-5x and 6x-7x, respectively, compared to our pre-acquisition expectations of around 3.5x leverage,” S&P said.

The outlook is stable.

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