S&P gives BB- to Technicolor loans

S&P said it assigned a BB- issue rating to the €560 million-equivalent senior secured term loans (made up of a euro-denominated loan and a dollar-denominated loan) to be issued by Technicolor SA (BB-/stable/B).

The recovery rating is 3, indicating an expectation of meaningful recovery (50%-70%; rounded estimate: 55%) in the event of default.

The agency also affirmed its BB- issue rating on the group's existing €450 million senior secured term loan borrowed by Technicolor and euro- and dollar-denominated amortizing term loans, borrowed by orphan special-purpose vehicle, Tech Finance & Co. SCA The recovery rating is unchanged at 3, indicating an expectation of meaningful recovery (50%-70%; rounded estimate: 55%) in the event of default.

S&P said it expects to withdraw the ratings on Tech Finance's senior secured term loans upon refinancing with the proposed term loans.

S&P said the action follows Technicolor's proposed full refinancing of its debt sitting at Tech Finance and maturing in 2020.

The recovery rating on the existing and proposed senior secured debt instruments is supported by the agency’s valuation of the company as a going concern. It is constrained, however, by S&P’s view of the company's weak business risk profile, the removal of the mandatory amortizations under the former term loans and the substantial amount of equally-ranked secured debt.

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