Moody’s rates Sulo, loan B2

Moody's Ratings said it assigned a long-term B2 corporate family rating and a B2-PD probability of default rating to SULO Group SAS (Sulo). Concurrently, the agency assigned a B2 rating to the planned €350 million senior secured term loan B due 2031 and the €60 million senior secured revolving credit facility due 2030 all issued by SULO SAS, a subsidiary of SULO Group. The outlook assigned to both entities is stable.

Sulo's B2 CFR considers the company's leading positions in the waste bins and containers, bailers and compactors markets, its favorable growth prospects bolstered by higher recycling policy targets, a large and diversified customer base that includes municipalities, waste disposal companies and blue chip retailers and an increasing share of recurring service and aftermarket-related revenues that support Sulo's revenue predictability and EBITDA margin expansion, the agency said.

However, the rating also mirrors the company’s relatively small size with somewhat geographical and product concentration and the non-recurring nature of sales linked to bins and containers, “the – relative to other manufacturers – low, but strengthening EBITA margin of11.3%; Moody's Ratings-adjusted pro-forma gross leverage (2023) of 4.6x; expectation of debt-funded growth through bolt-on acquisitions to further consolidate the market and expansion into adjacent activities,” Moody’s said in a press release.

The new term loan will be applied towards the repayment of a €154 million unitranche facility, €175 million shareholder return, including the full repayment of outstanding convertible bonds, and to transaction-related fees and expenses as well as cash to Sulo's balance sheet.

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