S&P: Diamond Resorts International Inc.'s $400M Senior Secured Notes Rated 'B+'; All Other Ratings Unchanged
Diamond has shifted the sizing of its debt tranches that will fund its $2.2 billion acquisition by affiliates of funds managed by Apollo Global Management LLC. The company has announced that it has downsized its proposed term loan B facility to $800 million from $1.2 billion and will issue $400 million in senior secured notes that will rank pari passu with the term loan B. Although there is a very modest increase in debt outstanding under our default scenario, there is less amortizing debt in the capital structure because of the shift, so there is minimal impact to recovery prospects on the secured debtas a result of the funding mix shift. We anticipate the company will prioritize cash flow to repay debt over the near term, potentially improving recovery prospects. In addition, our 'CCC+' issue-level rating and '6' recovery rating on the company's proposed $600 million senior unsecured notes issue due 2024 are unchanged.