S&P rates PetVet loan B

S&P said it assigned B issue and 3 recovery ratings to Romulus Intermediate Holdings 2 Inc.’s (PetVet) $275 million incremental first-lien term loan. The 3 recovery rating reflects meaningful recovery (50%-70%; rounded estimate: 50%) in default.

The agency also changed the outlook to negative from stable and affirmed all its ratings.

PetVet will use the proceeds for acquisitions and related expenses.

“The outlook revision reflects the risk that PetVet will sustain S&P Global Ratings-adjusted leverage of more than 9x and face weakening cash flow due to the slowdown in its revenue growth and its elevated debt issuance to finance acquisitions over the next 12 months,” S&P said in a press release.

The agency said it forecasts PetVet pace of organic revenue growth will decline to about 2% in 2022 and 6% in 2023, mostly due to price increases.

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