S&P cuts some WillScot ratings, rates new notes B

S&P said it affirmed its B+ issuer credit rating on WillScot Corp. (Williams Scotsman) and removed the rating from CreditWatch, where S&P placed it with negative implications on June 22. The outlook is stable.

WillScot has agreed to acquire its competitor Modular Space Holdings Inc. (ModSpace) for a total enterprise value of $1.1 billion.

The company plans to finance the acquisition with a combination of borrowings from its $1.35 billion asset-based lending facility, a proposed $300 million second-lien note issuance, a proposed $200 million unsecured note issuance, approximately $128 million of new equity and additional equity warrants.

At the same time, S&P said it lowered its issue-level rating on the company's existing $300 million second-lien notes to B from B+ and removed the rating from CreditWatch, where S&P placed it with negative implications on June 22. S&P also revised its recovery rating on the notes to 5 from 4. The 5 recovery rating indicates an expectation for modest (10%-30%; rounded estimate: 20%) recovery in the event of a default.

Additionally, S&P said it assigned a B issue-level rating and 5 recovery rating to the company's proposed $300 million second-lien notes, which will be issued by Williams Scotsman International, Inc. The 5 recovery rating indicates an expectation for modest (10%-30%; rounded estimate: 20%) recovery in the event of a default.

“The affirmation reflects our belief that the combined company will have somewhat weaker credit metrics than WillScot had as a stand-alone company,” S&P said in a news release.

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