S&P rates Emeco notes B+

S&P said it assigned its B+ long-term issue rating to the planned five-year A$250 million of senior secured fixed rate 6¼% medium-term notes due 2026 issued by Emeco Pty Ltd. Emeco Holdings Ltd., rated B+, and subsidiaries guarantee the notes. The agency also assigned the notes a 3 recovery rating, reflecting an expectation for meaningful (50%-70%; rounded estimate 65%) recovery prospects in default.

The company will use the proceeds to refinance all U.S. $180 million of its 9¼% senior secured notes due 2024 with an associated call premium and pay transaction fees and hedges. The refinancing should reduce the group's annual interest expense going forward by about A$9 million, S&P said.

“We view the transaction as broadly leverage neutral. Our B+ long-term issuer credit rating on Emeco Holdings Ltd. is unchanged,” the agency said in a press release.

The outlook is stable.

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