S&P rates CLEAResult loans B, CCC+

S&P said it assigned its B corporate credit rating to CRCI Longhorn Holdings Inc. (operating as CLEAResult). The outlook is stable.

At the same time, S&P assigned a B issue-level rating and 3 recovery rating to the company's proposed first-lien facility, which consists of an $85 million revolving credit facility due 2023 and a $425 million term loan due 2025. The 3 recovery rating indicates an expectation for meaningful (50-70%; rounded estimate 65%) recovery in the event of a payment default.

S&P also assigned a CCC+ issue-level rating and 6 recovery rating to the company's proposed $150 million second-lien term loan due 2026. The 6 recovery rating reflects an expectation for negligible (0-10%; rounded estimate: 0%) recovery in the event of a payment default.

“Our ratings reflect our expectation that CLEAResult's new owner will not substantially alter the company's expected operating performance,” S&P said in a news release.

“The new capital structure is nearly double the size of its previous debt profile, with S&P Global Ratings' adjusted leverage at about 7x by year-end 2018. However, we believe the company will continue generating free operating cash flow in the range of $25 million-$30 million annually, and improve profitability to a level that is sufficient to support gradual deleveraging toward the mid-6x area by the end of 2019.”

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