S&P rates Advanced Disposal loan BB, notes B-

S&P said it upgraded the corporate credit rating on Advanced Disposal Services Inc. by one notch to B+, along with the rating on its existing debt by one notch and removed the ratings from CreditWatch, where they were placed with positive implications in September.

The agency also said it assigned a BB rating and 1 recovery rating to the company’s proposed $1.84 billion senior secured credit facilities, which consist of a $300 million revolving facility due in 2021 and $1.54 billion term loan B due in 2023.

S&P also said it assigned a B- rating and 6 recovery rating to the company’s proposed $425 million senior unsecured notes due in 2024.

Following completion of the initial public offering and associated debt repayment, Advanced Disposal improved its credit measures to a level that is no longer weaker than other highly leveraged peers, the agency explained.

S&P said it estimates the company’s adjusted debt-to-EBITDA metric has decreased to about 5.5x as of June 30, compared with 6.4x before the debt reduction.

The company also is expected to keep this figure below 6x over the next year, the agency said.

While the upcoming transaction increases the company’s term loan by $180 million from its immediate post-IPO level, the almost equivalent $175 million reduction in its 8¼% senior notes keeps debt leverage manageable while also reducing interest expense, S&P said.

The company’s recent operating performance has been solid with strong profitability during the second quarter likely to continue, the agency added.

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