S&P upgrades Ontex IV to BB-

Standard & Poor's said it raised its long-term corporate credit rating on Ontex IV SA to BB- from B.

The outlook is stable.

The rating was removed from CreditWatch with positive implications, where it was placed on June 10.

According to the agency, the upgrade reflects a successful IPO, after which Ontex reduced its overall debt burden and publicly committed to a less leveraged financial structure. The company has also strengthened its corporate governance and oversight in order to comply with requirements for the public listing of its shares, S&P said.

Ontex used proceeds from the recently completed IPO to repay €280 million of its €910 million debt, resulting in an improvement in debt protection metrics. Based on the agency’s base-case scenario, it estimates that the company should maintain debt to EBITDA on a fully adjusted basis of about 4 times to 4.5 times on average over the next three years, compared with the pre-IPO levels of above 6 times. S&P’s financial profile assessment is further supported by Ontex's publicly stated financial policy of an intention to maintain a net debt/EBITDA ratio of about 3 times.

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