S&P gives Brookfield Slate, loan B

S&P said it gave preliminary B ratings to Brookfield Slate Holdings III Ltd. (Cupa Group) and its planned €480 million term loan. The loan’s recovery rating is 3. Cupa also plans to secure a €100 million revolving credit facility.

Brookfield Asset Management will use Brookfield and the loan to acquire Cupa Group, a slate roofing products manufacturer, and refinance its capital structure.

“As the leader of natural slate, Cupa manages a majority of Spanish slate reserves across 20 quarries and 24 plants. The quarries have over 75 years of average remaining life. We see the group's profitability as above average, with an EBITDA margin of over 22%, which is boosted by the higher margins in the Cupa slate segment. The manufacturing process of slate does not require significant energy costs, unlike clay or cement. With its distribution business, the group also enjoys vertical integration in the U.K.,” S&P said in a press release.

The agency said it projects free operating cash flow of more than €20 million in 2022-2023 and capital expenditures of about €35 million in 2022 and €30 million in 2023.

The outlook is stable.

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