S&P ups TK Elevator Topco

S&P said it upgraded TK Elevator Topco’s issuer rating to B from B-, its rating on the senior secured debt to B+ from B and the issue rating on the senior unsecured debt to CCC+ from CCC. The recovery ratings on the senior secured and unsecured debt remain at 2 and 6, respectively.

“We expect the group will benefit from the economic recovery, thanks to new installation and cost-containment measures that we foresee resulting in debt to EBITDA of less than 8x (excluding payment-in-kind [PIK] notes) and an adjusted EBITDA margin of about 14% in fiscal year 2022 (ending Sept. 30, 2022),” S&P said in a press release.

The agency also noted the TK Elevator plans to add €200 million to its term loan and use the proceeds to redeem 10% (circa €165 million) of its senior unsecured notes, as well as reprice its term loan Bs.

The refinancing is leverage neutral, S&P said, and the lower interest cost will help support the FOCF and interest coverage ratios.

“Together with the planned repricing of the existing TLBs, we estimate annual interest savings of a low-double-digit million amount, which will modestly support the cash flow generation and interest coverage ratios,” S&P said.

The outlook is stable.

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