S&P affirms Envigo

S&P said it affirmed its B- long-term corporate credit rating on Envigo Holdings Inc. and removed the rating from CreditWatch, where it was placed with positive implications on Dec. 1.

The outlook is developing.

At the same time, the agency affirmed the B- rating on Envigo's senior secured debt and removed the rating from CreditWatch. The recovery rating is 3, indicating expectations for meaningful (50%-70%; rounded estimate 50%) recovery in the event of a default.

In addition, S&P affirmed the ratings on Envigo Laboratories Inc.'s existing debt, including the B+ rating on the first-lien debt and CCC rating on the second-lien debt.

The 1 recovery rating on the first-lien debt reflects an expectation for very high (90%-100%; rounded estimate 95%) and the 6 recovery rating on the second-lien debt reflects an expectation for negligible (0%-10%; rounded estimate: 0%) recovery.

The agency said the ratings on Envigo reflect a belief that the company will generate modestly positive free cash flow in the $10 million area in 2018 and 2019, despite the step-up in the interest rate in April for some of its issues that will increase cash interest to about $40 million annually.

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