Research Update: American Rock Salt LLC Outlook Revised To Stable From Positive On Higher Expected Leverage, New Debt Rated

Mount Morris, N.Y.-based salt producer American Rock Salt LLC is pursuing a debt-financed recapitalization that will include making a $207 million distribution to its shareholders. Therefore, we expect the company's leverage to increase to about 6.5x in fiscal year 2021, which compares with 5.2x in fiscal year 2020 and our prior expectation of less than 5.0x. We revised our outlook on American Rock Salt to stable from positive and affirmed our 'B' issuer credit rating. At the same time, we assigned our 'B' issue-level rating and '3' recovery rating to the company's proposed $470 million first-lien term loan due 2028 and our 'CCC+' issue-level rating and '6' recovery rating to its proposed $100 million second-lien term loan due 2029. The

...- Mount Morris, N.Y.-based salt producer American Rock Salt LLC is pursuing a debt-financed recapitalization that will include making a $207 million distribution to its shareholders. Therefore, we expect the company's leverage to increase to about 6.5x in fiscal year 2021, which compares with 5.2x in fiscal year 2020 and our prior expectation of less than 5.0x. - We revised our outlook on American Rock Salt to stable from positive and affirmed our 'B' issuer credit rating. - At the same time, we assigned our 'B' issue-level rating and '3' recovery rating to the company's proposed $470 million first-lien term loan due 2028 and our '###+' issue-level rating and '6' recovery rating to its proposed $100 million second-lien term loan due 2029. - The stable outlook reflects our forecast that American Rock Salt's leverage will increase to about 6.5x in fiscal year 2021. Assuming that its revenue and EBITDA generation remain in line with long-term historical averages, we expect the company to improve...

Research Update