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S&P rates United Subcontractors loans B+, B-
Standard & Poor's said it affirmed its B+ corporate credit rating on United Subcontractors Inc. S&P also assigned its B+ bank loan rating with a recovery rating of 4 to the company's proposed $40 million first-lien revolving credit facility due 2011 and $295 million first-lien term loan due 2012 and a B- bank loan rating with a recovery rating of 5 to the proposed $65 million second-lien term loan due 2013.
The outlook is stable.
Proceeds will be used to refinance United Subcontractor's existing $265 million term loan B, pay a $90 million dividend to its owners and pay related fees and expenses.
S&P said ratings reflect the company's modest revenue base and relatively narrow product focus within a cyclical end market, high supplier-concentration risk, some geographic concentration and a highly leveraged financial profile.
S&P also said the ratings reflect healthy operating margins, a high proportion of variable costs, fairly good prospects for residential construction and insulation demand and favorable competitive dynamics within this segment.
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