S&P cuts Mitel, rates loans B, CCC+

S&P said it lowered its long-term corporate credit rating on Mitel Networks Corp. to B from B+ and removed all of its ratings from CreditWatch, where they were placed with negative implications April 25. The outlook is stable.

The agency assigned its B long-term corporate credit rating to parent MLN UK HoldCo Ltd. and assigned its B issue-level rating to Mitel's proposed first-lien senior secured debt consisting of a $100 million revolving credit facility due 2023 and a $1.02 billion term loan B due 2025.

The 3 recovery rating indicates an expectation of meaningful (50%-70%; rounded estimate 55%) recovery in a default scenario.

In addition, the agency assigned its CCC+ issue-level rating to the company's proposed $360 million second-lien senior secured term loan due 2026. The 6 recovery rating indicates negligible (0%-10%; rounded estimate 0%) recovery.

The agency said the downgrade follows increased leverage of about 7.2 times in 2018 compared with previous forecasts of 3.5 to 4 times in the same period.

The proposed sale to financial sponsor Searchlight Capital Partners will add about $750 million of balance-sheet debt to Mitel, which has a pro forma S&P-adjusted EBITDA base of about $215 million in 2018, thus significantly weakening the company's leverage metrics.

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