S&P ups Hunter Holdco 3

S&P said it raised Hunter Holdco 3 Ltd.’s issuer rating to B from B- and gave its first-lien credit facilities B issue with 3 recovery ratings.

Clayton Dubilier & Rice LLC will be taking UDG Healthcare plc private and merging the company with Hunter.

“Our rating on Hunter reflects our expectation that funded leverage will remain above 8x over the near term but that the company will generate about $110 million-$130 million of discretionary cash flow after earnout payments in 2022. The acquisition of UDG improves the company's scale and adds a packaging business, Sharp (slightly more than 20% of revenue), but the company remains a specialized provider of commercialization and packaging services to the pharmaceutical industry,” the agency said in a press release.

The outlook is stable, indicating an expectation for 4%-9% pro forma revenue growth in 2022 and improving adjusted EBITDA margins of about 21%-22%, S&P said.

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