S&P lowers Allnex, rates new debt B

S&P said it lowered the long-term corporate credit rating on Allnex (Luxembourg) & Cy SCA to B from B+.

The agency also said it lowered to B from B+ the rating on the group's existing senior secured facilities, which were co-issued by Allnex SARL and Allnex USA Inc.

The recovery rating on the facilities has been revised down to 4 from 3, indicating the increased amount of senior secured debt following the proposal to issue €425 million in senior secured loans.

A recovery rating of 4 indicates 30% to 50% expected default recovery.

The senior secured facilities consist of a €160 million revolving credit facility due in September 2021, €730 million term loan B1, $398 term loan B2 and $300 million term loan B3.

Each of the term loans matures in September 2023.

The outlook is stable.

S&P also said it assigned a B rating and 4 recovery rating to the proposed senior secured debt, which will be fungible with the existing facilities.

The action follows Allnex's plans to raise €425 million in senior secured debt.

The funds will either be distributed to shareholders or used to continue the company's investment plans, the agency said.

S&P said it believes the decision to increase group leverage is aggressive and now forecasts a year-end 2017 adjusted debt-to-EBITDA ratio of 6x compared to a previously forecast ratio of less than 5x.

The agency also said it forecasts that EBITDA cash interest coverage will remain stable since the increased debt amount outstanding offsets the lower margin achieved in the March 2017 re-pricing of the group's senior secured facilities.

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