S&P says Enjoy off watch

S&P said it affirmed Enjoy SA’s B- ratings and removed them from CreditWatch with negative implications, where they were placed on Nov. 28.

By obtaining a waiver for the December 2019 covenant measurement, along with an amendment on the covenants for 2020, Enjoy eliminated debt payment acceleration risks in the short term and bought time to conduct asset sales to improve its capital structure.

The net debt-to-EBITDA ratio was amended to equal or below 6.5x, from 5.5x previously, between March and December 2020, equal or below 5.5x between March and December 2021, and to equal or below 5x between March and December 2022, from 4.5x previously.

However, the amendment as of March 2021 is pending on the company's ability to pledge 62.5% of Baluma's, a Uruguayan subsidiary, shares in favor of domestic bondholders. But, even if Enjoy is unable to pledge shares in favor of domestic bondholders, covenant threshold will be 6.5x in 2020. “We expect the company's net leverage under covenant definition, which differs from S&P's adjusted metrics, to remain between 5x and 6x next year,” said S&P in a press release.

To complete the pledge in favor of domestic bondholders, the company has to perform the call on its international bond and release the current pledge in favor of international bondholders. The company plans to sell real estate assets in Antofagasta, Coquimbo, and Pucon, and sell more domestic bonds to raise $200 million it needs to call the international bond.

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