S&P rates Milano Holding B, loan B+

S&P said it assigned a B rating to Milano Holding Corp. and a B+ issue-level rating and 2 recovery rating to the company’s first-lien debt at subsidiary Milano Acquisition Corp., indicating S&P’s expectation for substantial (70%-90%, rounded estimate: 70%) recovery.

Milano’s capital structure will include a $400 million five-year revolving credit facility, undrawn at close, a $2.4 billion seven-year senior secured first-lien term loan and an unrated $800 million privately placed second-lien term loan.

Proceeds will be used to acquire DXC Technology Co.’s U.S. state and local health and human services business.

“Our ratings reflect the company’s high leverage, partially offset by its leading market position and our expectation of EBITDA expansion and solid cash flow generation as a stand-alone company,” S&P said in a press release.

The outlook is stable. “The stable outlook reflects an expectation of success as a stand-alone entity with steady organic sales growth in the mid-single digits over the next several years along with stable EBITDA margins, solid cash flow generation, and leverage remaining above 5x in 2021-2022,” S&P said.

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