S&P rates Mercury Payment loan BB-

Standard & Poor's said it assigned a BB- rating and 2 recovery rating to Mercury Payment Systems LLC's proposed $100 million incremental first-lien term loan B.

The 2 recovery rating indicates 70% to 90% expected recovery in a default.

The proceeds will be used to finance a dividend to shareholders.

S&P also lowered the rating on the company's existing first-lien credit facilities to BB- from BB. The recovery rating was revised to 2 from 1.

The lower ratings are solely the result of the additional pari passu first-lien debt in the capital structure.

The B+ corporate credit rating is unchanged by the proposed transaction.

The additional debt increases the last-12 month pro forma leverage to about 4x from about 2.5x, S&P said.

The ratings reflect the company's narrow addressable market, modest EBITDA base, high level of competition from entities with significantly better resources and the risks associated with the transition to its in-house processing platforms, S&P said.

These considerations are partly offset by the company's embedded position within its market niche and consistently strong growth and operating performance, the agency said.

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