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S&P ups Tegrant, rates loan B-
Standard & Poor's said it raised the corporate credit rating on Tegrant Corp. to CCC+ from CCC.
The agency said it removed all ratings from CreditWatch, where it was placed with positive implications in December.
The outlook is stable.
The upgrade follows Tegrant's improved earnings prospects after significant restructuring actions and its integration of Createc Corp., S&P said.
The acquisition of Createc is expected to generate significant synergies in the coming quarters, the agency said.
The challenging macroeconomic environment has hindered recent profitability, S&P said, and concerns about sufficient liquidity and covenant restrictions constrain the ratings.
But, the agency said it believes earnings generation will meaningfully improve in the second half of 2011.
The agency said it assigned a B- rating to Tegrant's $25 million first-lien term loan C due 2014 with a 2 recovery rating, reflecting 70% to 90% expected recovery in a default.
The company primarily used funds from the term loan C with borrowings on the revolving credit facility to fund the acquisition, S&P said.
The agency also said it upgraded the company's existing $265 million first-lien credit facilities to B- from CCC+ and the issue-level rating on the company's $75 million second-lien term loan facility to CCC- from CC.
The recovery ratings on the first-lien facilities remain at 2, reflecting 70% to 90% expected recovery in a default. The recovery rating on the second-lien term loan facility remains at 6, indicating 0% to 10% expected recovery in a default.
The ratings reflect the company's high leverage, limited liquidity and upcoming maturities in 2013, offset by the expectation of support from its private-equity sponsor, S&P said.
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