S&P puts Servus on positive watch

Standard & Poor's said it placed its B long-term corporate credit rating on Servus Holdco Sarl, the parent company of German capital goods group Stabilus, on CreditWatch with positive implications.

At the same time, the agency placed its B issue rating on the senior secured €315 million 7¾% bond due 2018, issued by Servus Luxembourg Holding SCA and guaranteed by Servus on CreditWatch with positive implications. The recovery rating on this bond was revised downward to 4 from 3. The 4 recovery rating indicates an expectation of average (30%-50%) recovery prospects in the event of a payment default.

S&P said the CreditWatch placement follows Stabilus' announcement of a planned IPO on the Frankfurt Stock Exchange and its intention to reduce debt.

The agency understands that Stabilus intends to use €59 million of the net proceeds to prepay a portion of the €315 million senior secured bond. It also understands that prior to the closing of the IPO, profit participation loans - which relate to a 2010 debt restructuring and are subordinated to senior debt - will no longer be liabilities of Servus.

S&P could raise the long-term corporate credit rating on Servus by one notch on completion of the IPO and planned debt reduction.

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