S&P assigns BB to Amer Sports, loans

S&P said it assigned BB ratings to Amer Sports Inc. and its new $600 million senior secured term loan B and €600 million senior secured term loan, both due in 2031. The recovery rating on the loans is 3 (recovery range: 50%-70%; rounded estimate: 60%). The outlook is stable.

Amer Sports completed its IPO on Thursday. The IPO proceeds amount to about $1.27 billion. Amer Sports plans to use the proceeds and partial drawings under the new $800 million revolver to reimburse the $1.46 billion equivalent term loan A provided by ANTA Sports. Additionally, Amer Sports' outstanding shareholder loans of about $2.8 billion equivalent (about €2.6 billion), treated as equity according to the agency’s criteria, will be converted into common equity.

“Under our base-case scenario, the company's S&P Global Ratings-adjusted debt to EBITDA will decrease to about 3.5x-3.8x at year-end 2024, from an expected 5.6x-5.7x at year-end 2023. The deleveraging is mainly driven by debt repayments post-IPO, while we expect annual free operating cash flow (FOCF) generation will remain negative over 2024-2025 due to an expected increase in capital expenditure (capex) and inventory build-up,” S&P said in a press release.

The agency added “We believe that overall positive industry trends, Amer Sports' competitive position, and the group's geographical expansion will support revenue growth and profitability expansion over the next two to three years.”

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