OREANDA-NEWS. S&P Global Ratings today said it affirmed its 'B' corporate credit rating on Eagan, Minn.-based C1 Investment Corp. The outlook is stable.

At the same time, we assigned our 'B' issue-level rating to the ConvergeOne Holdings Corp.'s $335 million first-lien term loan due 2023 and $50 million revolving facility due 2021 with a '3' recovery rating (50%-70%, lower half of the range) , and a 'CCC+' issue-level rating on the company's $100 million second-lien term loan due 2024 with a '6' recovery rating (0%-10%) .

"The rating affirmation reflects our expectation that ConvergeOne's adjusted leverage will remain below the mid-6x area over the next year and that operating performance will continue to improve as the company integrates recent acquisitions," said S&P Global Ratings credit analyst Dee Banson.

The company's plan to refinance its existing capital structure to fund a dividend will result in a little more than $100 million of incremental debt, leading to adjusted leverage in the low 6x area up from around the high 4x area at June 30, 2016.

The rating also reflects the company's narrow scope of operations in a competitive and highly fragmented market, considerable supplier concentration with significant dependence on Avaya Inc. and Cisco Systems Inc., and the company's relatively high leverage with pro forma leverage in the low-6x area after the transaction close. ConvergeOne's leadership position in this niche market, diverse customer base, and growing addressable markets combined with the increasing complexity of communications solutions partly offset the aforementioned risk factors.

The stable outlook reflects our expectation that the company will sustain its operating trends and improve free cashflow despite dependence on two key suppliers, Avaya and Cisco.