S&P rates Hotelbeds loan B, view to negative

S&P said it assigned a B rating and 4 recovery rating to HNVR Midco Ltd.'s proposed €400 million facility.

The agency also revised the outlook to negative from stable and affirmed the company's B issuer credit rating.

HNVR Midco, the parent company of Hotelbeds, plans to pay a €490 million dividend to its financial sponsors – Cinven, the Canada Pension Plan Investment Board and EQT – using proceeds from a new €400 million senior secured loan facility due 2025 and €100 million of cash on hand.

The proposed debt issuance will weaken the company's credit metrics with its pro forma adjusted debt-to-EBITDA ratio increasing to about 9x in fiscal year 2019 from 6.8x in 2018, reflecting the sponsors' more aggressive financial policy than previously anticipated, S&P said.

The negative outlook reflects a view that incremental debt will pressure the credit metrics over 2019, the agency said, and that the company might be unable to reduce leverage to less than 7x in 2020.

The proposed transaction also reflects a more aggressive financial policy from the company's owners than previously known, S&P said.

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