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S&P upgrades KION, debt
Standard & Poor's said it raised its long-term corporate credit rating on KION Material Handling GmbH to BB from BB- and assigned a positive outlook.
Subsequently, the agency withdrew the corporate credit rating on KION Material and assigned a BB corporate credit rating to the group's top holding company, KION Group AG (KION), which had been the publicly listed entity since the IPO in summer 2013.
The outlook is positive.
At the same time, S&P raised its issue ratings on the €650 million and €500 million senior secured notes to BB from BB-.
The recovery ratings the €325 million term loan credit facility H1 due 2018 and €650 million term loan credit facility H2 due 2020, both issued by Linde Material Handling GmbH, remain unchanged at 4.
In line with the raised corporate credit rating, S&P also raised the issue ratings on the two credit facilities and their corresponding notes (€325 million 7 7/8% notes due 2018, €450 million 6¾% notes due 2020 and €200 million floating-rate notes due 2020), each of which was issued by special-purpose vehicle KION Finance SA, to BB from BB-.
Upon completion of the repayment of the 7 7/8% notes and the floating-rate notes, the agency will withdraw its ratings on those instruments. It will also withdraw the recovery rating on the €325 million term loan credit facility H1 due 2018.
S&P said the upgrade resulted from its expectation that over 2014-2015, KION will improve its operating performance further and generate positive free cash flow. This should allow KION to further deleverage and strengthen credit metrics from their current levels: adjusted funds from operations to debt of about 17% and debt to EBITDA of about 3.3x at year-end 2013.
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