S&P Global Ratings assigned Aretec Group Inc. a B- issuer credit rating, with a stable outlook, following news that the capital market company is selling to private equity firm Genstar Capital LLC.
The rating agency also assigned a B- issue rating on the company's proposed first-lien revolving credit facility and term loan, and a CCC rating on the proposed second-lien term loan.
According to S&P, the ratings reflect Aretec Group's "very weak" capitalization due to a lack of tangible equity, high leverage, low profitability and relatively weaker market position than some peers.
Following the completion of the deal, which is expected to occur either late third quarter or early fourth quarter, S&P expects the company to continue to operate with stabilized retention rates. The rating agency also expects Genstar to enable and encourage Aretec's management to continue to invest in the platform while not making distributions to the private equity fund in the near term.
Aretec Group is the holding company of Cetera Financial Group Inc.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.