S&P rates Rinchem B-

S&P said it gave B- ratings to Rinchem Co. LLC and its planned first-lien credit facility. The recovery rating on the facility is 3 (rounded estimate: 55%).

Stonepeak Infrastructure Partners agreed to acquire Rinchem. The deal will be financed with a $300 million term loan and an equity contribution from Stonepeak. Rinchem’s credit facility will also include a $35 million revolver, expected to be undrawn at close.

“Given Rinchem's focus on the transportation and storage of specialty chemicals, the company has significant revenue concentration on an end-market and customer basis. It derives about 75% of its revenues from the semiconductor end-market and has significant revenue concentration with its largest customer, which is much higher than rated peers. Although the company has reported low customer attrition and a track record of growing business with new and existing customers, we believe this exposure presents risk to operating performance should a customer choose to insource a portion of its business with Rinchem or change logistics providers,” the agency said in a press release.

The outlook is stable. S&P said it estimates debt to EBITDA improving to the low-5x area in 2023 from about 6x in 2022, while funds from operations to debt improving to about 12% in 2023 from about 10% in 2022.

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