S&P lowers Armacell

S&P said it downgraded Armacell (Neptune Holdco Sarl) and its senior secured debt to B- from B.

“The downgrade is underpinned by our expectation that Armacell's leverage will remain elevated in 2022-2023, given modest EBITDA growth amid currently challenging economic conditions. We expect Armacell's adjusted debt to EBITDA will remain elevated at 8.5x-8.7x in 2022 (pro forma including the full-year contribution of two recent acquisitions), compared to 8.6x in 2021. The recent acquisitions of Izolir and Austroflex (both manufacturers of pre-insulated pipe systems) also led to higher debt, since Armacell funded them by drawing down on its revolving credit facility (RCF),” S&P said in a press release.

However, forecasts Armacell’s leverage slowly improving, but staying elevated in 2023 at about 8x and probably remaining above 7.4x in 2024.

The outlook is stable.

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