S&P: SRS Distribution First-Lien Recovery Rating Revised To '4' From '3' On $100 Million Incremental Term Loan Issuance
At the same time, we affirmed our 'CCC+' issue-level rating on SRS' $130 million second-lien term loan due 2023. The '6' recovery rating remains unchanged, indicating our expectation that lenders would receive negligible recovery (0%-10%) of their principal in the event of a payment default.
McKinney, Texas-based SRS Distribution is the third largest wholesale roofing distributor in the U. S. with 162 branches in 39 states.
The 'B' corporate credit rating on SRS incorporates our expectation that the company's leverage will be about 5.2x pro forma for the transaction (adjusted for operating leases). The corporate credit rating also reflects the company's stable and above-average operating profitability as a distributor, the relatively small--but increasing--size and scale of its operations compared with those of its larger and better capitalized competitors, its highly competitive end markets, and its exposure to volatile construction cycles and unpredictable weather patterns. For more information on SRS, please see our most recent research update, published June 3, 2016, on RatingsDirect.