Heartland Dental LLC's Proposed $200 Million Incremental First-Lien Term Loan Rated 'B-' (Recovery Rating: '3')

TORONTO (S&P Global Ratings) June 16, 2022--S&P Global Ratings today assigned its 'B-' issue-level rating and '3' recovery rating to Heartland Dental LLC's proposed $200 million incremental first-lien term loan. The '3' recovery rating indicates our expectation for meaningful (50%-70%; rounded estimate: 50%) recovery in the event of a payment default. The company plans to add the proceeds from this incremental debt to its balance sheet for future acquisitions and to pay related transaction fees. In May 2022, the company extended the maturity of the revolver to April 30, 2027, from April 2023, which we viewed favorably. Although we estimate the proposed term loan will increase Heartland's leverage by about 0.5x, we project it will likely maintain leverage of 9x-10x,

...Simplified waterfall - Net enterprise value (after 5% administrative costs): $1,316 million - Collateral value available to secured debt: $1,316 million - First-lien secured debt: $2,573 million - --Recovery expectations: 50%-70% (rounded estimate: 50%) - Collateral value available to senior unsecured debt: $0 - Senior unsecured debt: $323 million - --Recovery expectations: 0%-10% (rounded estimate: 0%) Note: All debt amounts include six months of prepetition interest....

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