S&P cuts Xella, rates loan B

S&P said it downgraded LSF10 XL Investments Sarl (Xella) to B from B+ and assigned a B rating to its proposed €1.95 billion senior secured term loan with a 3 recovery rating.

Xella plans to use the proceeds to refinance its €1.67 billion term loan and distribute €710 million to its shareholder Lone Star.

“Despite stronger-than-expected performance in 2020, with our estimate of adjusted EBITDA up by more than 4% to about €318 million, the proposed dividend recap transaction will result in much higher leverage.

Our adjusted pro forma gross debt-to-EBITDA will deteriorate to about 7.5x as of end-2020, or below 9x, including the preferred equity certificates (PECs), about 1.5x higher than before this transaction,” S&P said in a press release.

The outlook is stable.

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