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S&P alters Vialto outlook to negative
S&P said it revised its outlook for CD&R Vialto UK Intermediate 3 Ltd. (Vialto Partners) to negative from stable and affirmed all its ratings, including the B- issuer and issue ratings. Vialto’s first-lien term loan and revolver were issued through Vialto US Opco Inc.
“Carving out Vialto's global business from PwC has proven to be more burdensome than originally anticipated, with very high cash burn amid onerous transition expenses. We now anticipate free operating cash flow (FOCF) deficits of about $225 million in fiscal 2023 (ending June 2023), driven by a culmination of operating headwinds and higher costs related to the company's separation from PwC. Our forecast is in addition to the approximately $68 million of unadjusted FOCF deficits recorded during the two-month period from Clayton, Dubilier & Rice's (CD&R) acquisition of the company on April 29, 2022, through its 2022 fiscal year-end (June 30, 2022),” S&P said in a press release.
The agency said it expects Vialto to generate positive free cash flow after the first half of fiscal 2024; however, the outlook reflects the cash burn that could lead to tighter liquidity.
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