Fitch puts Afflelou on positive watch

Fitch Ratings said it placed Lion/Seneca France 2 SAS's (Afflelou) B long-term issuer default rating on Rating Watch positive.

The positive watch follows news that Afflelou plans to launch an initial public offering in the fourth quarter of 2016 or early 2017, Fitch said.

The proceeds, as well as a new €270 million syndicated bank loan conditional on the IPO, will be used to redeem 3AB Optique Developpement SAS's €365 million senior secured notes, as well as Afflelou's €75 million senior notes ahead of their contractual maturity in 2019.

Fitch said it estimates that a successful placement would lead to significant de-leveraging, which should support an upgrade of the group's issuer default rating by at least one notch to B+.

The transactions also will strengthen the company's funding structure and lead to an improved credit profile, the agency said.

The company will benefit from the injection of new equity capital following the initial public offering and materially lower indebtedness post recapitalization, Fitch said.

While financial metrics will have improved significantly following the recapitalization, the business profile may still constrain the ratings in the B rating category, the agency said.

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