S&P rates Exela loans B+, notes CCC+

S&P said it assigned a preliminary B corporate credit rating to Exela Technologies Inc.

The agency said it assigned a preliminary B+ rating to the company's proposed $100 million revolving credit facility due 2022, $525 million senior secured term loan due 2023 and $525 million senior secured notes due 2023.

The 2 recovery rating on the senior secured facilities indicates 70% to 90% expected default recovery.

S&P also said it assigned a preliminary CCC+ rating to the company's proposed $300 million senior unsecured notes due 2024. The 6 recovery rating on the senior unsecured notes indicates 0 to 10% expected default recovery.

The outlook is stable.

The ratings reflect the company's adjusted leverage in the low 6x range immediately following the merger and a forecast for adjusted leverage to fall to the low 5x range over the next 12 to 18 months, the agency said.

S&P said its adjusted leverage includes $100 million of preferred equity, which is viewed as debt because of the incentive for the owners to replace this capital with debt.

The agency said it could reevaluate the ratings if the final transaction includes more than $100 million of preferred equity.

The ratings also consider a view of the mature, but critical type of businesses that the combined company will operate going forward, S&P said.

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