S&P rates AI Avocado loans B-

S&P said it assigned a B- rating to the €730 million and $30 million first-lien term loans to be issued by AI Avocado Holding BV, the holding company of Unit4.

The 3 recovery rating on the loans indicates 50% to 70% expected default recovery.

The agency said it does not expect any material changes on the company's debt structure given that the proposed facilities predominantly constitute an extension of Unit4's existing term loans, which consist of €500 million, €230 million and $30 million first-lien term loans.

S&P noted that the proposed facilities provide more flexibility to Unit4 in terms of the ability to make acquisitions, shareholder returns and asset disposals.

The recovery rating is supported by the absence of material prior-ranking obligations, the agency said, but constrained by the company's large amount of senior secured debt.

S&P said it values AI Avocado as a going concern due to its established position and client relationships in the ERM software segment for certain sectors, along with its expanding recurring revenue base.

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