S&P: The Intertain Group Ltd. Secured First-Lien Revolver And Term Loan Ratings Placed On Watch Negative
"The CreditWatch placement follows the announcement of Intertain's proposed ?200 million senior secured notes offering," said S&P Global Ratings credit analyst Andrew Ng. The placement reflects our opinion that the issuance of the senior secured notes will likely reduce the recovery expectation on the company's first-lien senior secured revolver and term loan from the existing 90%-100% (very high recovery) to 70%-90% (substantial recovery; in the high end of the range). "As a result, we are likely to revise the recovery rating on the first-lien senior secured revolver and term loan to '2' from '1'," Mr. Ng added.
The new notes will partially pay down existing loan and pre-pay earn-out obligations in 2016 and fund earn-out payments in 2017, so we do not expect the debt to have a material impact on Intertain's credit metrics. We expect the company will remain in the significant financial risk profile category, with adjusted debt-to-EBITDA, including the remaining earn-out obligation, of about 4.0x in 2016 and lowering to about 3.3x in 2017 as Intertain continues to deleverage.
We will resolve the CreditWatch placement once the company has closed the transaction on its senior secured notes offering. This involves reviewing the terms and conditions of the newly secured notes and reviewing the credit agreement amendment with existing debtholders.