S&P rates Triton, loan B

S&P said it assigned B ratings to Triton Water Holdings Inc. and its planned $1.8 billion senior secured first-lien term loan due 2028. The recovery rating is 3, reflecting an expectation for meaningful (50%-70%; rounded estimate 65%) recovery in default.

One Rock Capital Partners LLC and Metropoulos & Co. agreed to acquire Nestle Waters North America for $4.5 billion, including fees. They plan to finance the deal with $2.15 billion of senior secured credit facilities, consisting of a $350 million asset-based lending revolving credit facility and a $1.8 billion first-lien term loan B with $750 million of other secured debt and $670 million of unsecured debt.

“Our ratings reflect high pro forma leverage, financial sponsor ownership, and aggressive financial policy. We estimate financial leverage will be in the low-7x area when the transaction closes. We believe the company’s financial policies are largely driven by its financial sponsor One Rock Capital Partners and those policies will likely prevent the company from sustaining leverage below 5x for an extended time,” S&P said in a press release.

The outlook is stable, based on the forecast that Triton will generate modest revenue and EBITDA growth, and realize synergies, such that adjusted leverage will improve to the mid-6x area by the end of 2021 from the low-7x area pro forma for the transaction, the agency said.

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