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S&P: Alliance view to negative
S&P said it revised the outlook on Alliance Automotive Holding Ltd. to negative from stable.
The agency also said it affirmed the company’s B+ long-term corporate credit rating.
S&P also said it affirmed the B+ rating on Alliance Automotive Finance plc's €540 million fixed-rate notes, including a €180 million proposed tap issue, and €100 million of floating-rate notes.
The recovery rating on the notes remains at 4, indicating 30% to 50% expected default recovery.
S&P also said it affirmed the BB rating on the upsized €65 million super senior revolving credit facility issued by Alliance Automotive Investment Ltd. The recovery rating on this facility remains at 1, indicating 90% to 100% expected default recovery.
The outlook revision follows news that Alliance Automotive plans to acquire FPS in a fully debt-funded transaction that will add €180 million to the group's gross debt and likely increase the group's leverage to about 5.5x in 2016 on an adjusted basis, S&P said.
The agency said it previously expected the group to de-leverage to 4.7x in 2016 and assumed no further gross debt increase.
Nevertheless, S&P said it anticipates that the leverage will come down to less than 5x in 2017 after the full-year contribution of newly acquired entities lifts EBITDA by about €30 million to €40 million.
With the acquisition of FPS, Alliance Automotive will gain access to significant logistics infrastructure that includes one national platform and 20 regional platforms in the United Kingdom, the agency said.
This should enable the group to extend the geographic reach for its existing operations in the United Kingdom, which account for about 25% of total sales, S&P said.
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