OREANDA-NEWS. S&P Global Ratings today said it assigned its 'B' corporate credit rating to San Francisco-based BC Equity Ventures LLC (Bay Club). The outlook is stable.

At the same time, we assigned a 'BB-' issue-level rating and '1' recovery rating to both the company's proposed $20 million senior secured revolving credit facility due 2021, which has a first-out provision, and to the $75 million asset sale bridge loan due 2017, which has a first payment priority with respect to expected proceeds from the contracted sale of one of Bay Club's San Francisco area properties and surrounding real estate. The '1' recovery rating indicates our expectation for very high (90%-100%) recovery in the event of a payment default.

We also assigned a 'B' issue-level rating and '3' recovery rating to the company's proposed $350 million senior secured first-lien term loan due 2022. The '3' recovery rating indicates our expectation for meaningful (50%-70%; upper half of the range) recovery in the event of a payment default.

The company will use the proceeds from the proposed credit facilities to refinance existing indebtedness and repay temporary financing used to fund two acquisitions it made in July 2016.

"The rating on Bay Club primarily reflects its high level of leverage and limited geographic diversity and scale," said S&P Global Ratings credit analyst Daniel Pianki.

However, the company benefits from low attrition rates, a unique product offering, good customer demographics, and moderate anticipated profit volatility.

The stable outlook reflects our expectation for continued good operating performance from modest same store membership growth, stable dues increases, and positive mix shift as existing members upgrade to higher-tier memberships, which will enable the company to reduce leverage to the mid-5x area by the end of 2017.