Moody’s affirms Motor Fuel Group

Moody's Investors Service said it affirmed CD&R Firefly 4 Ltd.'s (Motor Fuel Group) B2 corporate family rating and B2-PD probability of default rating.

Simultaneously, Moody's affirmed CD&R Firefly Bidco Ltd., the B1 instrument ratings of the secured facilities maturing in 2025, the revolver and the letter-of-credit facility both due in 2024, as well as the Caa1 rating of the second-lien loan maturing in 2026.

The outlook is stable.

The proceeds from the proposed incremental £186 million first-lien and £40 million second-lien term loans along with £168 million of cash from the balance sheet will be used to fund a dividend to its private equity owners and pay transaction related fees.

“The dividend recapitalization is credit negative because MFG's debt-to-EBITDA will increase substantially to 7.0x from 6.1x as of Sept. 30, 2019 on a proforma basis, i.e. including synergy benefits already achieved and the annualised contributions from acquired businesses,” Roberto Pozzi, Moody's lead analyst for MFG, said in a news release.

“However, the affirmation reflects the company's track record of rapidly reducing leverage and Moody's expectation that it will reduce leverage below 6.5x within the next 12-18 months, mainly driven by ongoing commercial and operational initiatives and improved fuel margins.”

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