Moody’s gives Euro Garages CFR, loans B2

Moody's Investors Service said it assigned a B2 corporate family rating and a B3-PD probability of default rating to Optima Finco Ltd. (EG), the parent of the Euro Garages group of companies.

Concurrently, the agency assigned a provisional B2 (LGD3) rating to the senior secured credit facilities totaling £745 million equivalent, comprising term loan B, revolving credit and capex/acquisition tranches, to be issued by Optima Sub-Finco Ltd.

The outlook on all ratings is stable.

Private equity firm TDR Capital has acquired a minority equity stake in the business from the founders, brothers Mohsin & Zuber Issa, in a transaction which also sees the full refinancing of existing debt, part of which was put in place to fund the recent acquisitions of two portfolios of petrol filling stations from U.K. subsidiaries of Exxon Mobil Corp. (Aaa stable) and Royal Dutch Shell plc (Aa1 negative).

Moody’s said the B2 corporate family rating reflects: (a) The company's low profit margins, due to the revenue mix being geared towards fuel and convenience retail; (b) execution risk of integrating recently acquired petrol station portfolios from Exxon Mobil and Shell; (c) high adjusted debt to EBITDA of around 5.8 times at closing and slow deleveraging; and (d) a degree of ongoing execution risk as well as event risk should the company choose to make further sizeable portfolio acquisitions.

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