S&P rates TMS loan BB-

S&P said it assigned its BB- issue-level rating and 2 recovery rating to TMS International Corp.’s $150 million term loan B due 2024. The 2 recovery rating indicates an expectation for substantial recovery (70%-90%; rounded estimate: 75%) in default.

The company will apply the proceeds toward its acquisitions of the Stein Cos. and an energy, environmental, and material services provider based in Louisiana for a total of $170 million.

“We expect TMS’ leverage to increase closer to 6x at closing, from an estimated 4.6x earlier in 2020, which is still below our 7x downgrade threshold. We anticipate the company’s leverage will fall back below 5x toward the end of 2021 if its integration of the two companies proceeds smoothly and the recent recovery in domestic steel demand and steel mill utilization rates holds,” S&P said in a press release.

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