S&P lowers Trico view to negative

S&P said it revised the outlook on Trico Group LLC to negative from stable and affirmed its B issuer credit rating.

The agency also affirmed the B rating on the company's existing term loan.

S&P also said it assigned a B rating and a 3 recovery rating to the proposed $235 million term loan B-2 and withdrew the BB- issue-level rating on the company's asset-based lending revolving credit facility at the issuer's request.

The outlook is negative.

Trico recently acquired Airtex and ASC and plans to acquire FRAM Group, S&P explained.

The agency said it Trico's debt leverage is expected to rise as it seeks funding to pay for its purchase of FRAM.

The negative outlook reflects integration risks over the next 12 months, inherent with acquiring operations whose total sales exceed that of existing Trico Group, S&P said.

The company's EBITDA is likely to be in the mid- to high-5x range in 2019, assuming all one-time transaction and restructuring charges occur in this time period, the agency said.

S&P said it expects the company's leverage to improve to mid-4x by 2020 as it realizes cost savings and pays down some of its debt.

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