S&P affirms Alliance Automotive, notes, loan

Standard & Poor's affirmed its B+ long-term corporate credit rating on Alliance Automotive Holding Ltd. The outlook is negative.

At the same time, S&P affirmed its B+ issue rating on instruments issued by Alliance Automotive Finance plc: €290 million of fixed-rate notes, which could be upsized by about €50 million, and €100 million of floating-rate notes. The recovery rating remains at 4, indicating S&P’s expectation of recovery in the lower half of the 30%-50% range in the event of a payment default.

In addition, S&P affirmed its BB issue rating on the €50 million super senior revolving credit facility (RCF) issued by Alliance Automotive Investment Ltd. The recovery rating on this facility remains at 1, indicating the agency’s expectation of 90%-100% recovery in the event of a payment default.

Alliance Automotive plans to do a second bond tap of about €50 million that would bring the total amount of its fixed-rate notes to €340 million. The company intends to use the proceeds mainly to fund further acquisitions.

The additional bond issue and €40 million gross debt Alliance Automotive assumed as part of its acquisition of Coler in 2015, some of which S&P expects will be repaid this year, will increase the group's gross debt to about €500 million at the end of 2016. The agency’s adjustments to reported debt include about €30 million of operating leases and €5 million of pension obligations.

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