S&P rates Vivint notes B-

S&P said it assigned its B- issue-level rating and 3 recovery rating to APX Group Inc.'s (Vivint) proposed $500 million of senior secured notes due in 2027. The 3 recovery rating indicates expectations for meaningful recovery (50%-70%; rounded estimate: 55%) in the event of a payment default.

The company will use the proceeds along with the proceeds from the recent $100 million upsizing of its first-lien term loan to repay debt. Vivint plans to repay the $270 million outstanding on the 8 7/8% senior secured notes due 2022, to partially repay $73 million out of $900 million of 7 7/8% senior secured notes due 2022, to pay $134 million of outstanding borrowings on the first-lien revolving credit facility due 2021(not rated), and to improve the company's cash balances to $119 million.

These transactions will help the company to address its short-term debt maturities and improve near-term liquidity.

S&P’s B- issuer credit rating on Vivint is unchanged and reflects the company's narrow focus, limited geographic diversification and elevated leverage.

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