Fitch gives Pegasus B

Fitch Ratings said it assigned an expected B long-term issuer default rating to Pegasus Merger Co., an affiliate of funds managed by Apollo Global Management, Inc. that will merge with and into Tenneco Inc. to effectuate Apollo's acquisition of Tenneco.

The agency also assigned expected BB-/RR2 ratings to Pegasus' planned first-lien secured revolving credit facility, term loans and notes. Fitch gave expected CCC+/RR6 to Pegasus' proposed issuance of senior unsecured notes.

Fitch's expected ratings apply to a planned $600 million secured revolving credit facility, a $1.3 billion secured term loan A, a $1.4 billion secured term loan B, $1.75 billion of senior secured notes and $1 billion of senior unsecured notes.

“Pegasus' IDR reflects Fitch's expected pro forma post-acquisition credit profile of Tenneco. Tenneco's leverage will increase upon the closing of the acquisition and the refinancing of its capital structure. However, Fitch expects the company could have options to accelerate debt reduction over the intermediate term as it realizes incremental benefits from its expected cost savings initiatives,” the agency said in a press release.

The proceeds will be used to cover a portion of the acquisition costs and to refinance most of Tenneco's capital structure.

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