Moody's assigns Ekaterra B3, loans B2

Moody's Investors Service said it assigned a first-time B3 corporate family rating and a B3-PD probability of default rating to Cuppa Bidco BV (ekaterra), the parent company of ekaterra, created from the spinoff of Unilever plc's tea business. Concurrently, the agency assigned B2 ratings to the €2.083 billion equivalent guaranteed senior secured term loans,split into two tranches, due 2029 and the €375 million guaranteed senior secured revolving credit facility due 2028, both to be borrowed by the company. The outlook is stable.

On July 1, CVC Capital Partners completed the acquisition of ekaterra from Unilever for about €4.5 billion on a cash-free, debt-free basis. The transaction was financed with €2.381 billion of equity and €2.553 billion of debt.

"The B3 rating reflects ekaterra's high initial leverage and weak cash flow generation, which offset the benefits of its solid business profile derived from its significant scale, geographic diversification and leading global market position in the tea segment," said Lorenzo Re, a Moody's vice president, senior analyst and lead analyst for ekaterra, in a press release.

"We expect ekaterra's operating performance and credit metrics will improve once the separation from Unilever and subsequent transformation process is completed, but there is execution risk and visibility is reduced owing to the current macroeconomic slowdown," Re added.

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