S&P revises recovery on FDO upsized loan

S&P said it affirmed the B rating on FDO Holdings Inc.'s first-lien debt and revised its recovery rating on the debt to 4 from 3 following news that the company is upsizing its new first-lien term loan due 2023 by $50 million to $350 million.

The 4 recovery rating indicates 30% to 50% expected default recovery.

The proceeds will be used to fund additional dividends to financial sponsors, S&P said.

The B corporate credit rating considers an expectation that the company's leverage will be about 5x pro forma for the transaction from the mid- to high-4x range with the originally proposed transaction, the agency said.

The stable outlook reflects an expectation that the company will be able to continue profitably expanding its store base on a leverage neutral basis in the next 12 months, S&P said.

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