ac investment research
AC Investment Research

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Houston-based PSS Industrial Group Corp.—formerly Prowler Acquisition Corp.—is refinancing its capital structure with a $300 million senior secured term loan and $50 million revolver. The company's adjusted credit metrics have improved such that we are forecasting adjusted debt to EBITDA in the low-4x area through 2019. As a result, we are raising the issuer credit rating to 'B-' from 'CCC+'. We are also assigning our 'B' issue-level rating and '2' recovery rating to the proposed debt. The stable rating outlook reflects reduced refinancing risk, stronger liquidity, improved debt leverage, and significant revenue growth in the midstream and downstream and industrial segments. NEW YORK (S&P Global Ratings) Feb. 7, 2019--S&P Global Ratings today took the rating actions listed above. The rating action reflects the company's recent strong performance, as we now expect adjusted EBITDA at PSS Industrial Group Corp. (PSSI) to remain in the low $70 million area for the next 24 months, notably higher than our previous estimate of about $50 million. In addition, the proposed refinancing mitigates near-term refinancing risk, improves liquidity, and reduces annual interest costs. The revenue strength reflects revenue growth in the midstream, downstream and industrial segments. As a result, we are now forecasting that PSSI's adjusted debt to EBITDA will be in the low-4x area in 2019 instead of the low 5x area. The stable outlook reflects our view the proposed refinancing improves the company's liquidity and that revenue growth in the midstream sector will result in adjusted leverage improving to the low 4x area in 2019.

AC Investment Research

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