February 28, 2012 / 8:51 PM / 7 years ago

TEXT-S&P rates Swift Transportation LLC

Feb 28 - Standard & Poor's Ratings Services said today that it assigned 'BB'
issue ratings to U.S.-based trucking company Swift Transportation Co. LLC's    
 proposed $200 million term loan B-1 and $674 million term loan B-2. We
also assigned a '1' recovery rating to the proposed term loans to indicate our
expectation that lenders would receive very high (90%-100%) recovery following a
payment default. Swift Transportation Co. LLC is a first-tier subsidiary of
Phoenix-based Swift Transportation Co.	
	
If the financing deal closes as currently planned, which likely will happen in 	
the coming week, we expect to raise our rating on the company's existing 	
second-lien notes, due 2018, by one notch (to 'B+' from 'B'). We would 	
simultaneously revise the recovery rating on those notes to '4' from '5' to 	
reflect our greater recovery expectations in a simulated payment default.	
	
The scheduled amortization terms in the proposed financing imply a reduction 	
of first-lien claims in our simulated default scenario. In our recovery 	
analysis, we simulate a bankruptcy in 2015, following the loss of major 	
customers amid higher fuel prices, rising interest rates, and lower economic 	
activity. We believe that lenders would achieve greatest recovery value 	
through reorganization of the borrower rather than liquidation. (For the 	
complete analysis, please see our recovery report on Swift Transportation, to 	
be published following this report on RatingsDirect.)	
	
The ratings on Swift Transportation Co. reflect Standard & Poor's assessment 	
of the company's business risk profile as "fair" and its financial risk 	
profile as "aggressive" according to our criteria. Swift's participation in 	
the highly fragmented, cyclical, and capital-intensive truckload (TL) trucking 	
industry is a key credit consideration. The company's position as the largest 	
TL carrier in the U.S. somewhat offsets these factors. Swift operates a fleet 	
of more than 16,000 tractors, 48,000 trailers, and 35 terminals across the 	
U.S. and in Mexico--thus attracting large corporate customers seeking a 	
variety of trucking services. Swift's size relative to most other industry 	
players also provides some competitive advantages, including economies of 	
scale in purchasing equipment, a greater ability to attract and retain 	
drivers, and resources to comply with increasing regulatory requirements. 	
Swift's profitability and cash generation have improved steadily in recent 	
quarters	
	
RATINGS LIST	
Swift Transportation Co.	
 Corporate credit rating               B+/Stable/--	
	
Ratings Assigned	
Swift Transportation Co. LLC	
 Senior secured	
  $200 mil. term loan B-1              BB	
   Recovery rating                     1	
  $674 mil. term loan B-2              BB	
   Recovery rating                     1
0 : 0
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