FCG Acquisitions Inc.'s First-Lien Delayed-Draw Term Loan Rated 'B-'; Second-Lien Delayed-Draw Term Loan Rated 'CCC'

NEW YORK (S&P Global Ratings) July 20, 2021--S&P Global Ratings today assigned its 'B-' rating to FCG Acquisitions Inc.'s (FCG's) proposed $120 million first-lien, delayed-draw term loan and its 'CCC' rating to the company's $50 million second-lien, delayed-draw term loan. The recovery rating on the first-lien debt is '3', indicating expectations for meaningful (50%-70%; rounded estimate: 50%) recovery in the event of a default. The recovery rating on the second-lien debt is '6', indicating expectations for negligible (0%-10%; rounded estimate: 5%) recovery in the event of a default. The delayed-draw term loans are not fungible with the existing term loans until drawn. FCG maintains an active acquisition pipeline, with a focus on increasing its scale in the highly fragmented and

...reorganization rather than a liquidation in a default scenario. Therefore, we value the company on a going-concern basis and apply a 5x multiple to our projected emergence EBITDA. - We assume the company's existing $100 million delayed-draw facility is fully utilized for acquisitions but have not yet factored in any outstanding borrowings under the company's proposed delayed-draw loans. Should these facilities be drawn, we would reassess recovery, including the EBITDA contribution from acquired entities. Simulated default assumptions - Jurisdiction: U.S. - Revolver facility assumed 85% drawn at default Simplified waterfall - Gross enterprise value: $404 million - Net enterprise value (after 5% administrative costs): $384 million - Valuation split in % (obligor/nonobligors): 80%/20% - Priority claims: $0 million - Collateral value available to first-lien debt claims: $357 million - Estimated first-lien debt claims: $707 million - --Recovery rating: '3' (50%-70%; rounded estimate: 50%) -...

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