S&P cuts ELO

S&P said it lowered its ratings for ELO (Auchan Holding) and its senior unsecured notes to BB+ from BBB-. The agency assigned a 3 recovery rating (65% recovery prospects) to the notes.

Besides a weak 2023, ELO plans to buy 98 stores from Casino Guichard Perrachon, which will push its leverage to nearly 4x even accounting for the €300 million investment from shareholders.

“Additionally, we estimate the acquired stores will add a significant amount of lease debt and annual lease payments, while their EBITDA contribution (pre-leases) will be negative in 2024 and only moderately positive in 2025-2026. Overall, we expect the transaction will increase S&P Global Ratings-adjusted debt by €600 million-€700 million in 2024,” the agency said in a press release.

S&P said it forecasts ELO’s adjusted leverage to stabilize at 3.5x-4x in 2025.

The outlook is stable.

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