S&P rates Ports America, notes BB-

S&P said it assigned Ports America Holdings LLC and its planned eight-year $630 million of senior secured notes BB- ratings. The recovery rating on the notes is 3, reflecting an expectation of meaningful (50%-70%; rounded estimate: about 60%) recovery under a hypothetical default.

Proceeds along with an unrated $125 million bridge loan facility will be used to refinance the company’s debt. The company plans to repay the bridge facility with proceeds from asset sales.

“Our BB- rating reflects the company’s leading position in the U.S., with about 70% of trade done by water, and its high operating flexibility since about 80% of operating expenses are variable. These are partially offset by low margins and a smaller scale compared with other global port operators in Europe and Asia. Our rating on Ports America also reflects our view that the company’s adjusted leverage will decrease, but remain elevated, over the next two years,” S&P said in a press release.

The outlook is stable.

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