S&P rates Modulaire secured debt B, unsecured debt CCC+

S&P said it assigned its preliminary B long-term issuer credit rating to Modulaire Investments 2 Sarl. S&P also assigned its preliminary B issue rating with a recovery rating of 3 to the new senior secured debt and its preliminary CCC+ issue rating with a recovery rating of 6 to the new senior unsecured debt.

The outlook is stable.

Brookfield has acquired Modulaire Investments 2 from TDR Capital for a cash purchase price of around €4.3 billion. Modulaire will repay the existing debt with new issuances and an equity injection.

As part of the acquisition from TDR Capital, Modulaire will issue €2.3025 billion of senior secured debt. This will be split across a €1.12 billion term loan B and €1.1825 billion-equivalent in senior secured debt, £250 million of which will comprise pound sterling senior secured debt.

Modulaire will also issue €435 million in senior unsecured debt and a €350 million senior secured revolving credit facility, which is expected to be undrawn when the transaction closes.

As part of the transaction, the existing senior secured and unsecured notes and the existing revolver will be redeemed.

“Modulaire has performed resiliently throughout the Covid-19 pandemic, completing several complementary bolt-on acquisitions over the past year,” S&P said in a news release. “Continued good cost control and expected operational improvements under the new ownership should support Modulaire's improving financial performance, despite leverage remaining high.”

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