ATS Consolidated Inc. Assigned #B# Corporate Credit Rating And Stable Debt Ratings Assigned

Stocks and Financial Services Press Releases Tuesday May 16, 2017 09:48
NEW YORK--16 May--S&P Global Ratings
  • ATS Consolidated Inc. (American Traffic Solutions, or ATS), a provider of traffic safety technology to municipalities and tolling services to rental car and fleet management companies in the U.S., is being acquired by Platinum Equity.
  • We are assigning our 'B' corporate credit rating to ATS Consolidated Inc.
  • The outlook is stable, reflecting our expectation that ATS will be able to support its debt burden with stable to improving operating performance over the next 12 months.
NEW YORK (S&P Global Ratings) May 15, 2017--S&P Global today assigned its 'B' corporate credit rating to Mesa, Ariz.-based ATS Consolidated Inc. The outlook is stable.

At the same time, we assigned our 'B' issue-level rating and '3' recovery rating to the company's proposed $325 million first-lien term loan due 2024. The '3' recovery rating indicates our expectation for meaningful recovery (50-70%, rounded estimate: 60%) in the event of payment default.

We also assigned our 'CCC+' issue-level rating and '6' recovery rating to the company's proposed $100 million second-lien term loan due 2025. The '6 recovery rating indicates our expectation for negligible recovery (0-10%; rounded estimated: 0%) in the event of payment default.

"The rating on ATS reflects the company's small size relative to rated peers, significant customer concentration, litigation risk, and its high leverage post-transaction above 5x," said S&P Global Ratings credit analyst Kenneth Fleming. The company's solid market position in a growing, albeit niche market, its long-standing customer relationships, and its ability to scale the business profitably partly offset these risks. We expect ATS's credit metrics and revenues to improve slightly over our forecast period. Pro forma for the transaction, adjusted leverage will be around 5.3x and free cash flow to debt will be in the mid- to high-single-digit percent area in the next 12 months.

The outlook is stable, reflecting our expectation that the company's credit ratios will improve marginally, as the company starts to implement cost saving initiatives under its new financial sponsor. We expect debt to EBITDA of below 5.0x and we expect free cash flow to debt to be in the mid- to high-single-digit percent area over the next 12 months.


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