S&P puts Brand Services on positive watch

Standard & Poor's said it placed its B corporate credit and senior secured debt rating and CCC+ subordinated rating on Brand Services Inc. on CreditWatch with positive implications.

The agency said that these ratings actions are in response to Brand's S-1 filing announcing the company's intention to progress with an IPO of $250 million in common stock, borrow additional debt under the company's existing term loan and redeem the company's subordinated notes, subordinated pay-in-kind notes and preferred stock.

If the transaction goes through as proposed, the corporate credit rating and senior secured rating would be raised to B+, additional debt borrowed under the company's existing term loan would be rated B+, the rating on the subordinated notes would be withdrawn at the time of their redemption and the outlook would be stable, the agency said.

At the same time, the bank loan recovery score of 2 was placed on CreditWatch with negative implications, S&P noted.

The ratings are restricted by Brand's narrow scope of operations, some customer concentration and a highly leveraged capital structure, S&P said, adding that these weaknesses are only partially offset by Brand's long-term customer relationships and large market share in North American scaffolding services.

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