S&P puts Thevelia on positive watch

S&P said it placed its B ratings for Thevelia Holdings Ltd. and Vistra Group Holdings (BVI) I Ltd. and their loans on CreditWatch with positive implications.

Thevelia plans to buy Vistra. “The combined entity's leverage will rise. It will take on about $600 million of incremental debt. On a proforma 2023 basis, we estimate Thevelia's adjusted debt-to-EBITDA ratio will reach above 8x following the acquisition. This compares with 7x for Thevelia and less than 6x for Vistra, on a stand-alone basis. Incremental financial risks from the transaction are elevated. This is given the high cost of debt and the large exposure to floating rates, amid rising interest rates,” the agency said in a press release.

However, S&P said it expects the deal will create a stronger company that will support free cash flow and deleveraging.

“The CreditWatch placement reflects the likelihood that we would raise the ratings by one-notch to B+ on completion of the transaction as proposed,” S&P said.

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