OREANDA-NEWS. S&P Global Ratings today said that it is affirming its 'B' issue-level rating, with a '3' recovery-level rating, on Bolton, Ont.-based Husky IMS International Ltd.'s first-lien debt following the company's announcement that it is seeking to increase the aggregate principal amount of its first-lien secured term loan under its existing credit agreement by US$160 million (for a total of US$1.45 billion).

All of our other ratings on the company are unchanged, including our 'B' long-term corporate rating on Husky. The outlook is stable.

The company intends to use the net proceeds from the incremental term loans, together with some cash, to redeem all of its US$161 million second-lien debt outstanding, as well as to pay related fees and expenses. Post transaction, we expect to withdraw the ratings on the second-lien debt.

"We base our corporate credit rating on Husky on our assessment of its leading position in the niche plastic injection molds and systems market and our expectation of adjusted debt-to-EBITDA remaining above 5.5x over the next two years," said S&P Global Ratings credit analyst Aniki Saha-Yannopoulos.

We assess Husky as having a fair business risk profile and highly leveraged financial risk profile. We expect the company will continue to maintain a high, albeit stable, level of debt that, in our view, limits the upside potential for our corporate credit rating on Husky. We updated our recovery analysis to reflect the proposed refinancing, with no change in our '3' recovery rating (50%-70% indicating meaningful recovery, at the low end of the range) on the company's first-lien debt. We now assume first-lien creditors have a priority claim on all of the company's assets in our simulated default scenario. In addition, the multiple applied to Husky's distressed EBITDA proxy was revised to 5.5x (from 5.0x) primarily to reflect the relative strength of its market position.

For our complete corporate credit rating rationale, please see our recent summary on Husky published June 8, 2016, on RatingsDirect.