Fitch assigns Assemblin debt B+

Fitch Ratings said it assigned Assemblin Financing AB a final long-term issuer default rating of B with a stable outlook. Fitch also assigned a final rating to the €250 million senior secured notes of B+/RR3/51%-70%. The conversion of the ratings into final follows the receipt and review of the final documentation.

The ratings indicate the company’s leading market positions in a stable and growing region, a strong brand and high execution in technical installation services in the areas of electricity, heating, sanitation and ventilation. The rating considers the high concentration to one country and limited scale but with a diversified customer base and end-markets. An added limit to the rating is Assemblin’s high leverage and while Fitch expects some deleveraging over the horizon, the agency sees leverage metrics staying well above its main peers and in line with a B category rating, Fitch said.

The recent refinancing and equity distribution will result in high initial leverage with funds from operations adjusted leverage forecasted at 7.2x at end-2019. Improved cash conversion with FFO margins reaching levels of 3% and higher after last year’s restructurings become effective is expected to provide some deleveraging. The new notes extend the maturity of Assemblin’s financing and Fitch views liquidity as satisfactory. “We assume Assemblin will continue with bolt-on acquisitions but expect continued positive free cash flow (FCF) to support some deleveraging and so expect FFO adjusted leverage to reach 5.4x by end-2022,” Fitch said in a press release.

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