Moody's eyes Galderma for upgrade

Moody's Ratings said it placed the ratings of Sunshine Luxembourg VII Sarl (Galderma) on review for upgrade, including its B2 long-term corporate family rating, its B2-PD probability of default rating and the B1 ratings on the company's senior secured bank credit facilities. Previously, the outlook was stable.

Galderma’s Wednesday announcement that it launched an initial public offering expected to raise proceeds of CHF 2 billion to CHF 2.3 billion triggered the review, the agency said.

The company plans to use part of the proceeds and new debt of about $2.9 billion to fully prepay its existing external debt facilities.

“Leverage is expected to reduce further to below 3x in 2024 through continued earnings growth. The debt reduction will also improve the company's interest cover metrics, with Moody's-adjusted EBITDA/interest expected to exceed 4x in 2024, compared to 1.5x in 2023. After the IPO Moody's expects the company to generate material positive free cash flow from 2024, compared to breakeven free cash flow in 2023,” the agency said in a press release.

Moody’s said it plans to complete the review shortly after the IPO’s close, which is expected later in March.

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