S&P rates Forward Air, loan BB-

S&P said it assigned its BB- issuer credit rating to Forward Air Corp. and BB- issue and 3 recovery ratings to the planned first-lien term loan. The 3 rating indicates meaningful recovery (50%-70%; rounded estimate: 60%) in default. The outlook is stable.

Last month, Forward Air agreed to acquire Omni Logistics LLC using a mixture of cash, debt, common equity, and preferred equity. The proposed debt financing will consist of an unrated $400 million revolving credit facility due 2028, and total debt commitments of $1.85 billion, including a $925 million first-lien term loan due 2030. The planned $1.168 billion of preferred equity in the agency’s adjusted debt calculation.

“The stable outlook reflects our expectation that the company is likely to achieve FFO to debt in line with the rating over the next 12 months. Pro forma for the transaction, we forecast S&P Global Ratings-adjusted FFO-to-debt in the mid-single digit area in 2023, improving to 11.3% in 2024 (including the preferred shares as debt), with further upside if the preferred shares are converted to common equity,” S&P said in a press release.

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