S&P gives Sherwood Parentco B+

S&P said it gave preliminary B+ ratings to Sherwood Parentco Ltd. and its planned three tranches of senior secured bond totaling roughly £1.2 billion. The recovery rating on the notes is 4, indicating an expected recovery of 40% on the senior secured bonds in default.

Sherwood, owned by TDR Capital, acquired Arrow Global Group plc for £563 million.

“Although TDR is experienced in the operations of European financial institutions, we remain cautious regarding the group's financial policy over the first 12 to 18 months of the new group. Our base case remains for relatively prudent financial management, but we see a remote risk that TDR could consider deploying further leverage for mergers and acquisitions in the European market, or to accelerate purchases in the group,” S&P said in a press release.

Sherwood will use the proceeds to repay the bridge facility used to repay Arrow's £990 million of senior secured notes at its acquisition.

The outlook is stable. “When combined with sluggish earnings and the new capital structure, we expect S&P Global Ratings-adjusted leverage above 5x over the remainder of 2021 and through 2022,” the agency said.

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