Fitch assigns B+ to CAB loan

Fitch Ratings assigned an expected senior secured rating of B+/RR3 to CAB SAS’ new term loan B of €240 million, which will be used to finance new bolt-on acquisitions and refinance the current drawing under the group’s revolving credit facility.

The agency also assigned a B rating to CAB with a negative outlook.

The B issuer rating reflects the defensive nature of the company’s routine medical testing business model expressed in high and stable EBITDA and free cash flow margins. The rating is materially constrained by its aggressive leverage profile and financial policies. However, the accelerated pace of mostly debt-funded acquisitions has substantially increased CAB’s financial risk and weakened its deleveraging potential, with funds from operations adjusted leverage projected to remain well above 8x in the next four years, the agency said.

“CAB’s inability or unwillingness to reduce leverage from the currently high levels for the rating, for example prompted by further debt-funded acquisitions, leaves a limited margin of safety, increasing the prospects of a downgrade to B- over the next 18 to 24 months as reflected in the negative outlook,” Fitch said in a press release.

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