S&P puts Lowell, Garfunkelux on negative watch

Standard & Poor’s said it placed the BB- long-term counterparty credit rating on Lowell Group Ltd. on CreditWatch with negative implications, along with the B+ long-term counterparty credit rating on Garfunkelux Holdco 3 SA, whose primary operating company is GFKL Financial Services AG.

Also placed on negative watch includes the ratings on Lowell’s senior secured debt and senior secured debt issued by Garfunkelux Holdco, along with a rated revolving credit facility by Blitz F15-269 GmbH, which is a special purpose subsidiary of Garfunkelux.

On Aug. 7, private equity firm Permira announced that a company backed by the Permira funds has agreed to acquire Lowell from majority shareholder TDR Capital, S&P said.

The Ontario Teachers’ Pension Plan will remain a significant minority shareholder, the agency said, with the remaining balance held by Lowell’s management.

The CreditWatch placements reflect downside risk based on uncertainty on the financing structure and the risk of Lowell materially leveraging, S&P said.

Lowell’s significant financial risk profile assumes that gross debt-to-adjusted EBITDA will be between 3x to 4x over the 12- to 18-months outlook horizon, the agency said.

S&P said it sees potential risks arising from Permira’s short track record for corporate governance, policies regarding risk-taking and financial management in relation to debt recovery businesses, and the execution risks arising from the transformative agreement.

© 2015 Prospect News.
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