APX Group Inc. $250 Million Senior Secured Notes Rated 'B-' (Recovery: '3')

NEW YORK (S&P Global Ratings) April 23, 2019--S&P Global Ratings today assigned its 'B-' issue-level rating and '3' recovery rating to APX Group Inc.'s (aka Vivint) $250 million proposed senior secured notes due in 2024.
The '3' recovery rating indicates our expectation for meaningful recovery (50%-70%; rounded estimate: 55%) in the event of a payment default. Vivint intends to use the proceeds to refinance a portion of its 8.75% senior unsecured notes due in 2020.
Our 'B-' issuer credit rating on Vivint reflects the company's narrow focus, limited geographic diversification, and elevated leverage while competing in the highly fragmented U.S. residential alarm monitoring industry. Our expectations include, among other things, company's substantial cash used as part of its customer acquisition strategy, leveraging its vast product variety in the growing smart home monitoring segment. Partially offsetting these risks is the recurring revenue model coupled with strong subscriber growth trends.
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