S&P cuts gategroup

S&P said it lowered its rating on gategroup Holding AG to CCC from B. The rating remains on CreditWatch with negative implications.

“As recovery of global air traffic appears to be weaker than we previously foresaw, airline caterer gategroup is likely to continue burning cash over the next 12 months, which will weigh on its liquidity,” S&P said in a press release.

To help the company, its shareholders will provide an interim liquidity facility of CHF 200 million. The owners will also invest CHF 25 million in equity and provide a CHF 475 million long-term subordinated convertible loan. “Furthermore, gategroup’s bank lenders have agreed in principle to extend the maturity of €665 million syndicated loan facilities to October 2026 from the original maturity of October 2021. The above is conditional upon bondholders’ approval to extend the bond maturities to February 2027. The bondholders will be approached in due course after the lockup agreement is announced,” S&P said.

S&P warned, depending upon the details, it might consider the transaction distressed.

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