S&P rates RS Ivy BB-, loan B

S&P said it assigned a BB- preliminary issuer credit rating to RS Ivy Holdco Inc. and a B rating with 6 recovery rating to its planned $450 million senior secured term loan.

RS Ivy Holdco is a newly formed holding company controlled by Riverstone Holdings. RS Ivy agreed to purchase Macquarie Terminal Holdings LLC and its subsidiary ITT Holdings LLC (IMTT) from Macquarie Infrastructure Corp. for about $2.68 billion, including the assumption of about $1.1 billion in debt.

The preliminary BB- rating is driven by the view of IMTT’s operations and the pro forma financial policy controlled by financial sponsor Riverstone, S&P said. “Our forward-looking adjusted debt/EBITDA for RS Ivy is in the 6x–6.5x range for the next few years, after consolidating the new holding company’s secured term loan with IMTT’s current capital structure. IMTT will be the only operating subsidiary in the new group, so our cash flow projections and business risk analysis will be driven by our view of IMTT’s operations,” S&P said in a press release.

“Pro forma for the transaction, we'd expect IMTT's senior unsecured debt to be equalized with RS Ivy's issuer credit rating at BB- given our expectation for 3 recovery,” the agency said.

Term loan proceeds will be used to help fund the acquisition.

S&P assigned a stable outlook. The outlook reflects the expectation of debt/EBITDA over 6x for the next few years, while utilization remains in the 90%-95% range and contracts are renewed and extended as they mature, the agency said.

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