S&P rates USI loans B, notes CCC+

S&P said it affirmed the B long-term counterparty credit rating on USI Inc. and removed it from CreditWatch negative, where it was placed March 17 following the announced investment by KKR & Co. LP and Caisse de depot et placement du Quebec (CDPQ), a Canadian pension fund.

The agency also said it assigned a B debt rating with a 3 recovery rating to the company's proposed senior secured facilities consisting of a $1.795 billion term loan due 2024 and $200 million revolver due 2022.

S&P also said it assigned a CCC+ debt rating with a 6 recovery rating to USI's proposed $705 million senior unsecured notes due 2025.

The rating assignments reflect a belief that, although the proposed recapitalization under KKR and CDPQ results in moderately weaker credit metrics, USI's sustained competitive position and relatively stable earnings and cash-flow generating capacity will enable it to carry the increased debt load and modestly de-lever through next year, the agency said.

The company's profile is considered highly leveraged due to its very aggressive financial policy stemming from meaningful private equity ownership under its new sponsors, S&P explained.

Following the transaction, KKR and CDPQ will have about 80% equity stake in USI with management and employees accounting for its remaining ownership, the agency said.

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