S&P assigns Galderma, loans B

S&P said it assigned B ratings to Sunshine Luxembourg VII Sarl (Galderma) and its CHF 3.5 billion equivalent senior secured first-lien term loan B and multi-currency revolving credit facility of CHF 500 million equivalent. The ratings are in line with preliminary ratings S&P assigned in July 2019.

“Our assessment of Galderma’s financial risk profile reflects its financial-sponsor ownership and S&P Global Ratings-adjusted debt to EBITDA of close to 10x in 2020 and 8x-8.5x over 2021 and 2022. Our base case forecasts a gradual deleveraging trend mainly on stronger EBITDA, even if we do not expect adjusted debt-to-EBITDA to slip below 6x over the medium term. We estimate funds from operations (FFO) cash interest coverage of 1.5x-2x post-transaction, improving slightly to above 2x at year-end 2021,” said S&P in a press release.

S&P doesn’t see the company increasing its leverage with acquisitions. The agency sees the company focusing on organic growth.

The outlook is negative. “The negative outlook reflects our view that, considering the current high leverage ratio, there is limited headroom to withstand any deviation from our base case. It also reflects potential volatility in credit metrics associated with execution risks in the company’s strategy,” the agency said.

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