S&P gives Service Logic first-lien loans B

S&P said it assigned a B- rating to Saber Intermediate Corp. (Service Logic) and a B rating with a 2 recovery rating to Service Logic Acquisition Inc.’s planned first-lien debt.

The company plans to issue a $100 million revolving credit facility, a $520 million first-lien term loan, a $150 million delayed-drawn first-lien term loan and $230 million of second-lien term loans. Proceeds and cash will be used to acquire Service Logic by Leonard Green Partners.

“Our rating on Service Logic incorporates its high starting debt leverage, aggressive acquisition strategy, and profit margins that are competitive but reflect its high labor costs and limited pricing power. At the same time, we view its key strengths, including its focus on largely nondiscretionary HVAC services, its good growth execution both organically and through well-integrated acquisitions, and FOCF generation of about $40 million-$45 million before semi-fixed earn-out payments, as partially offsetting these risk factors,” S&P said in a press release.

The agency assigned a stable outlook. “The stable outlook reflects our expectation that Service Logic will continue to expand its preventative maintenance customer base, which will enable it to generate an increased level of repair work, organically expand its business, and undertake a steady cadence of acquisitions to improve its top line in 2021,” S&P said.

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