OREANDA-NEWS. S&P Global Ratings said today that it affirmed its 'BBB-' issue-level rating on Lincolnshire, Ill.-based value-added reseller CDW LLC's senior secured term loan. The recovery rating remains '2'. CDW will amend its term loan credit facility to extend the maturity to 2023 from 2020. The term loan will continue to amortize at 1% per year and be free of financial covenants.

The 'BB+' corporate credit rating on CDW reflects its continued strong operating performance with organic revenue growth in the mid - to high-single digits and increasing profitability, due to a good mix of higher margin services revenue; its good position in the highly fragmented reseller market for technology products and services; and leverage that we expect to remain below the high-3x area through acquisitions compared with current leverage of about 3x.

For the full corporate credit rating rationale, see our research update on CDW published Nov. 23, 2015, on RatingsDirect.

Recovery analysisKey analytical factorsOur simulated default scenario assumes a payment default in 2021 due to increased competition, pricing pressure, and customer attrition, combined with an economic slowdown and a corresponding downturn in information technology spending. We value the company as a going concern because we believe its market position, brand, and customer relationships would make the company a viable business following a payment default. We applied a 5.5x multiple to an estimated distressed emergence EBITDA of $420 million to estimate gross recovery value of about $2.3 billion. Simulated default assumptionsSimulated year of default: 2021EBITDA at emergence: $420 millionEBITDA multiple: 5.5xThe asset-based facility is 60% drawn at defaultSimplified waterfallNet enterprise value (after 7% administrative costs): $2.15 billionValuation split (obligors, CDW nonobligors, Kelway nonobligors): 90%/5%/5%CDW priority claims: $776 millionKelway priority claims: $133 million-------------------------------------Collateral value available to secured creditors: $1.23 billionSecured first-lien debt: $1.47 billion--Recovery expectations: 70% to 90% (upper half of the range)-------------------------------------Unpledged value available for unsecured debt claims: $33 millionSenior unsecured debt claims: $1.76 billion--Recovery expectations: 0% to 10%Notes: All debt amounts include six months of prepetition interest. Collateral value equals asset pledge from obligors less priority claims plus equity pledge from nonobligors after nonobligor debt.