S&P rates Highline facility B

S&P said it assigned a B rating with a 3 recovery rating to Highline Aftermarket Acquisition LLC’s proposed $860 million senior secured first-lien credit facilities, including a $125 million revolver and $735 million first-lien term loan. The 3 recovery rating indicates expectations for meaningful (50%-70%, rounded estimate 60%) recovery in a default.

PPC Investment Partners LP agreed to acquire Highline Aftermarket Acquisition LLC and Warren Distribution and then merge the two companies.

The agency also assigned a B issuer rating to Highline Aftermarket Acquisition Parent LLC, which is the parent company and will be the financial reporting entity going forward.

“We expect to withdraw all outstanding ratings on Highline’s existing credit facilities when the transaction closes. This rating action assumes that the deal closes substantially on the terms presented to us, including around $550 million common equity contribution from the sponsor and the founder,” S&P said in a press release.

The agency also changed the outlook to stable from negative. “The stable outlook reflects our expectation that over the next year the combined company will successfully integrate and realize synergies, achieve modest topline and EBITDA growth, and generate positive free cash flow to improve adjusted leverage to around 6x by the end of 2021 from around 7x pro forma for the transaction,” S&P said.

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