S&P gives B to Uvesco, loan

S&P said it preliminarily gave B ratings to PAI Castellana Holding 1 SLU (Uvesco) and its planned €315 million term loan. The preliminary recovery rating on the loan is 3 (65%). The company also plans to secure a €50 million revolving credit facility, which will be undrawn at close. The outlook is stable.

PAI Partners plans to buy Uvesco via PAI Castellana and use the term loan to finance the buyout.

“We estimate the new debt will translate to S&P Global Ratings-adjusted leverage of about 5.9x at closing. Our adjusted leverage includes our estimate of about €260 million of lease debt at closing. Although we anticipate the company will capitalize on growth to deleverage by 0.1x-0.2x per year over our forecast horizon, we note that it could potentially re-leverage within the debt documentation framework, on the back of its private-equity ownership,” the agency said in a press release.

The outlook reflects the view that Uvesco's 3%-6% annual revenue growth, combined with an S&P Global Ratings-adjusted EBITDA margin of about 10% and positive free operating cash flow, will support moderate deleveraging of about 0.1x-0.2x per year in 2022-2025, from the estimated about 5.9x at the transaction's close, S&P said.

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