S&P assigns B to Ai Monet, loan

S&P said it preliminarily assigned B ratings to Ai Monet (Luxembourg) ParentCo Sarl and its planned €420 million senior secured term loan. The recovery rating on the loan is 3, indicating meaningful recovery (45%-50%, rounded estimate: 50%) in the event of a default. The outlook is stable.

Ai Monet is the parent company of Deutsche Fachpflege Gruppe and will use the new loan to refinance the €408 million outstanding debt including €20 million of drawn revolving credit facility and fund transaction fees and expenses. It will also put in place a new €90 million revolving credit facility, which will remain undrawn.

“We anticipate Deutsche Fachpflege will witness organic growth of 6% over 2024-2025 and focus on efficiency measures and cost discipline to expand its S&P Global Ratings-adjusted EBITDA margin progressively to 15% by 2025. We anticipate Deutsche Fachpflege will post an EBITDA margin slightly above 12% for 2023, although 100 basis points lower than the 2022 margin, driven by expenses linked to higher scale and cost structure governed by higher personnel expenses.

“Given the structural shortage of medical staff in Germany and the critical importance of attracting and retaining talent for hospital operators, we believe wages will continue to restrain immediate expansion of the group's operating profitability,” the agency said in a press release.

The outlook reflects the view that Deutsche Fachpflege will continue growing its sales and EBITDA, translating into debt to EBITDA anchored below 7x expected at 5.6x, and deliver positive free operating cash flow over the next 12 months, S&P said.

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