S&P affirms Oberthur on merger news

S&P said it affirmed the B- long-term corporate credit rating on Oberthur Technologies Group SAS.

The agency also said it affirmed the B- rating on the company’s senior secured debt and CCC rating on its senior unsecured notes.

The recovery rating on the senior secured debt issued by Oberthur’s subsidiaries, Oberthur Technologies SA and Oberthur Technologies of America Corp., is 3, indicating 50% to 70% expected default recovery.

The recovery rating on the senior unsecured notes issued by Oberthur Technologies Group remains at 6, indicating 0 to 10% expected default recovery.

The outlook is positive.

The affirmations follow news that Oberthur’s owner, Advent International, made an offer to acquire Safran SA’s identity and security activities for €2.43 billion, S&P said.

The transaction will enhance Oberthur’s market position and scale, but also will incorporate material integration risks, the agency said.

The company’s free operating cash flow will remain negative in 2017 due to likely integration and restructuring costs, S&P said.

But the agency said it expects Oberthur to generate positive free operating cash flow in 2017.

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