S&P rates HSS Hire notes B

Standard & Poor's said it assigned a preliminary B long-term corporate credit rating to HSS Financing plc, trading as HSS Hire.

The outlook is stable.

S&P also said it assigned a preliminary B rating to the proposed £200 million senior secured fixed-rate notes due 2019 to be issued by HSS. The recovery rating on these notes is 3, indicating 50% to 70% expected default recovery.

The ratings reflect the group's highly leveraged financial risk profile and weak business risk profile, S&P said.

HSS is planning to issue £200 million of new senior secured fixed-rate notes, the agency said, and to use the proceeds to repay £163.6 million of existing term debt and £29 million of existing shareholder loans and accrued payment-in-kind interest.

After the refinancing and partial repayment of shareholder loans and accrued interest, the group's capital structure will include £62.2 million of shareholder loans that accrue payment-in-kind interest at what is considered to be an aggressive rate of 10%, S&P said. These loans are considered debt under the criteria, the agency said.

The company's weak business risk profile reflects the fact that the group's geographical footprint is highly concentrated with virtually all revenue generated in the United Kingdom, the agency said, and more than one-third of group revenues generated in London and the South East of England.

The company operates in a well penetrated and highly competitive industry, S&P said. The players in this market price aggressively and differentiate themselves on speed and quality of service, the agency added.

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