S&P trims Cullinan

S&P said it lowered its ratings for Cullinan Holdco SCSp and its senior secured bonds to B from B+. Cullinan is the parent of AS Graanul Invest.

Graanul resolved its dispute with its largest customer; however, EBITDA plummeted 60% for the first nine months of 2023 to €40 million, the agency said. S&P had forecasted EBITDA for 2023 to be in the €140 million-€150 million ballpark. With the resolution, earnings should improve over 2024.

“That said, we still believe Graanul's margins will be structurally lower than they were in 2022 and in our previous base case. Most of its renegotiated contracts are based on cost plus a margin; this improves the ability to pass on costs but reduces margins. The new terms do not apply retroactively, so Graanul will not receive any compensation for the operating loss it incurred during the first nine months of 2023.

“Based on the new contracts, we have revised our assumptions and now expect EBITDA to be €110 million-€120 million over the next years. The weak EBITDA results this year weighed heavily on debt to EBITDA, which we expect will be about 10x by end-2023 and 6x by end-2024,” S&P said in a statement.

The outlook is stable.

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