S&P gives ITP, loan B

S&P said it gave preliminary B ratings to ITP SA and its planned €575 million-equivalent senior secured term loan. The preliminary recovery rating is 3, indicating meaningful (50%-70%, rounded estimate 60%) recovery at default.

Propulsion (BC) Finco Sarl, controlled by Bain Capital and minority Spanish investors, will use the loan to buy ITP. A €100 million multicurrency revolving credit facility, expected to be undrawn at close, is also planned.

“We expect that ITP will continue to benefit from its position as a tier 1 supplier of engine modules and components on high-growth engine platforms, such that S&P Global Ratings-adjusted EBITDA margins return to about 10% by 2023, with sound free operating cash flow (FOCF) generation. If the deal closes as expected, ITP's S&P Global Ratings-adjusted debt to EBITDA would be about 6x–6.5x in 2022, excluding one-off merger and acquisition (M&A) fees and debt-like preferred equity from our calculations,” S&P said in a press release.

However, the agency said it forecasts the company will lower leverage to under 6x in 2023.

The outlook is stable.

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