S&P rates Tank loan B

S&P said it affirmed the B issuer credit rating on Tank Holding Corp., and assigned a B rating and 3 recovery rating to the company's proposed first-lien credit facilities, indicating 50% to 70% expected default recovery in a default.

The stable outlook reflects an expectation that revenue growth and EBITDA margin expansion will allow the company to generate good free cash flow and reduce debt-to-EBITDA ratio to the 6.5x range over the next 12 months.

The company's financial leverage will decline to the 6.5x range over the next 12 months and lower than 6.5x thereafter, S&P said.

The proposed debt consists of a first-lien credit facility, which includes a $60 million revolver and $480 million term loan, the agency said, and a second-lien term loan.

S&P said it forecasts that Tank will continue to generate solid free cash flow, which the company is expected to use to make tuck-in acquisitions and repay debt.

Olympus Partners did not take a dividend from Tank during the sponsor's previous ownership from 2008 to 2012, S&P said, and its base case does not include sponsor dividends over the next two years.

The stable outlook reflects an expectation that Tank will benefit from a broadly favorable end market environment in 2019, the agency said.

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