S&P rates Flender, loan B+

S&P said it rated Flender, which is being acquired by Zephyr German Topco GmbH from Siemens AG B+. Financing will be provided through a €1.045 billion term loan B issued by its subsidiary Zephyr Germany BidCo GmbH. The recovery rating on the term loan is 3, reflecting an expectation of meaningful recovery (rounded estimate: 60%).

Zephyr will also secure a new €150 million revolving credit facility, pari passu to the term loan B, and a new €125 million pari passu guarantee facility.

Private equity firm Carlyle, which owns Zephyr, will use the proceeds and equity funding to acquire Flender.

“We estimate that as of closing (or day 1 following the transaction), Flender will have about €50 million of cash on its balance sheet. The €150 million RCF will be undrawn at closing. We forecast S&P Global Ratings-adjusted debt to EBITDA for fiscals 2021-2022 will be about 7.5x-8x and 4x-4.5x excluding CPECs that we view as debt-like. We forecast FFO to debt of about 10%-11% (17%-19% excluding CPECs) over the same horizon,” S&P said in a press release. CPEC are preferred equity certificates.

The outlook is stable.

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