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S&P lowers Transtar, rates loans B+, CCC+
Standard & Poor's said it lowered the ratings on Transtar Holding Co., including its corporate credit rating to B from B+.
The outlook is stable.
The agency also assigned a B+ rating and 2 recovery ratings to the company's proposed $510 million senior secured credit facility, comprising a $50 million revolving credit facility due 2017, a $295 million first-lien term loan due 2018 and a $165 million second-lien term loan due 2019.
The 2 recovery rating indicates 70% to 90% expected recovery in a default.
The agency also said it assigned a CCC+ rating to its second-lien term loan with a recovery rating of 6, indicating 0% to 10% expected recovery in a default.
The proceeds and $10 million of existing cash will be used to repay outstanding borrowings under the company's existing credit facility and fund a special dividend to the equity sponsor of $91 million.
The downgrade reflects the increase in leverage as a result of the proposed debt-financed dividend transaction, S&P said.
Transtar's financial risk profile is now viewed as highly leveraged, based on the expectation that pro forma debt-to-EBITDA will be about 7x, the agency said.
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