S&P rates Cognita add-on CCC+

S&P said it rated the €180 million add-on to Lernen Bidco’s (Cognita) term loan CCC+ and will use the cash to settle the purchase for the schools acquired in the fiscal year ending Aug. 31, 2022.

“These schools are based in United Arab Emirates (UAE), Spain, Mexico and Chile and their acquisition supports the group's strategy of improving its geographic diversity. That said, the acquisitions are fully debt-funded and were negotiated at an EBITDA multiple of about 12x-15x, with an initial cash outlay of about £150 million and deferred consideration of about £80 million in the medium term. Including these transactions, we calculate that the group leverage for 2022 will remain elevated at about 10.5x (compared with 11.5x in 2021), well above our previous expectation of 9x.,” S&P said in a press release.

Concurrently, the agency affirmed its CCC+ ratings on Cognita. The 3 recovery rating indicating meaningful recovery (50%-70% recovery; rounded estimate: 65%) on Cognita debt, including the €180 million tap, is unchanged.

The outlook is stable.

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