S&P revises Unit4 outlook to positive

S&P said it revised its outlook on Bock Capital Bidco BV (Unit4) to positive from stable and affirmed the CCC+ ratings on the company and its loans. The 3 recovery ratings (50%) on the revolver and term loan are unchanged.

“Unit4's financial performance improved in the first half 2023, and if this trend persists, we expect it to reduce leverage and generate positive FOCF. According to management's data, Unit4 is well on track to reduce annual operational expenditure to €180 million–a target of its cost efficiency project (Project Umbrella), which commenced in 2022.

“We also note that, so far, the company is on track to meet its budget of maintaining exceptional and restructuring costs at about €5 million for full-year 2023. This should lead to positive FOCF in 2023 and normalized adjusted leverage reducing to about 12x (including the payment-in-kind [PIK] facility) at year-end 2023, despite retaining cash outlays to fund some of the restructuring provisions booked in 2022,” S&P said in a press release.

The agency said it could upgrade Unit4’s ratings a notch if it meets S&P’s forecast and delivers “sustainably positive FOCF.”

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