S&P rates Varnsen notes B

S&P said it assigned a B corporate credit rating to Varnsen Industries Holdings Sarl, the parent of JPW Industries Holding Corp.

The outlook is stable.

S&P also said it assigned a B rating to JPW's proposed $220 million senior secured notes due in 2024.

The recovery rating is 4, indicating 30% to 50% expected default recovery.

The proceeds, along with an equity contribution from Gamut Capital Management, will be used to purchase JPW Industries and pay fees and expenses.

The ratings reflect a view of the company's small size in the highly competitive and fragmented $7 billion specialty tools market, high revenue concentration in the United States, relatively narrow product offerings, significant supplier concentration, relatively high debt and potential for aggressive financial policies, stemming from the company's financial sponsor ownership, S&P said.

These constraints are only partly mitigated by the company's long and established portfolio of brands, asset-light business model and relatively attractive EBITDA margins, the agency said.

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