S&P rates United Distribution loans B-, CCC

Standard & Poor's said it assigned a B- corporate credit rating to United Distribution Group Inc., along with a B- rating to the company's $290 million first-lien credit facilities, consisting of a $40 million revolving credit facility and a $250 million senior secured first-lien term loan.

The recovery rating is 3, indicating 50% to 70% expected default recovery.

The agency also said it assigned a CCC rating to its $135 million second-lien term loan. The recovery rating is 6, indicating 0% to 10% expected recovery in a default.

The outlook is stable.

The proceeds will be used to acquire GHX Holdings LLC and refinance existing debt.

The borrowers on the credit facilities are United Central Industrial Supply LLC and GHX Holdings LLC, which are two subsidiaries of United Distribution.

The ratings reflect the company's vulnerable business risk profile and highly leveraged financial risk profile, S&P said.

Key business risks include the company's relatively modest size, dependence on the cyclical mining and energy end markets for a large portion of its revenues and earnings, the agency said.

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