S&P puts Xella on watch

S&P said it placed its B ratings for LSF10 XL Investments Sarl (Xella) and its subsidiary LSF10 XL Bidco SCA on CreditWatch with negative implications.

The agency said in placed the ratings on negative watch after the company reported the sale of its insulation business unit URSA to Etex. URSA contributed about 30% of group sales and EBITDA for the 12 months ended Sept. 2021.

“The transaction is likely to result in higher leverage with the final impact on credit metrics depending on the use of disposal proceeds. The disposal valued the insulation business at close to €1 billion. Of the disposal proceeds, €285 million will be used to partially repay Xella's €1.95 billion outstanding TLB and the remainder will be kept as cash on balance sheet until a final decision on the use is made. We understand that all options are possible including a further debt repayment, investment in acquisitions, shareholder distributions, or a combination of these,” S&P said in a press release.

The agency plans to resolve the CreditWatch in the next three to nine months after the closing of the transaction and, after company with its shareholder makes a final decision on the use of proceeds.

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