S&P rates ADS Tactical, loan B

S&P said it assigned its B corporate credit rating to ADS Tactical Inc.

The outlook is stable.

The agency also assigned a B issue level rating to the company's proposed $330 million secured term loan B due 2025. The 4 recovery rating indicates expectations of an average recovery (30%-50%; rounded estimate: 30%) in a default.

“The ratings on ADS reflect the company's modest scale, high working capital needs, low margins and weak credit ratios,” S&P said in a news release.

“These factors are offset by the company's small, but leading position in the market for distributing military equipment, its good customer and product diversity and the likely strong demand generated by growing U.S. defense budgets.”

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