Fitch rates Flender parent BB-

Fitch Ratings said it gave Zephyr German Bidco GmbH, the parent company of Flender GmbH, a first-time expected BB- long-term issuer default rating with a stable outlook. Concurrently, Fitch assigned an expected rating of BB/RR2 to Zephyr’s proposed €1.05 billion senior secured term loan.

“The rating reflects Flender’s business profile as a niche manufacturer and its limited product focus. Flender is a leading gearbox and generator manufacturer with sizeable market shares, especially in EMEA. We expect Flender to generate strong free cash flow (FCF) at around 3% of revenue, in line with our investment-grade rating medians, which will support deleveraging in the medium term. This is driven by our assumption that Flender will not make sizeable acquisitions and dividend payments over the next four years,” Fitch said in a press release.

The agency’s forecast of funds from operations net leverage of around 5.5x is close to the b rating median in Fitch’s diversified industrials and capital goods navigator, Fitch said.

“However, we forecast that FFO net leverage will fall below 4.5x in the next 24 months, supported by strong FCF generation that is in line with investment-grade medians,” Fitch said.

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