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S&P revises Solera outlook to negative
S&P said it revised its outlook for Polaris Parent LLC (Solera) to negative from stable and affirmed the B- ratings on the company and its first-lien term loan tranches.
“We expect Solera's total available liquidity to decrease in fiscal 2025 due to greater cash interest expenses. Given the company's large variable-rate debt balance, primarily used to fund its aggressive fiscal 2022 acquisition activity, its FOCF generation has become sensitive to interest rate levels,” S&P said in a press release.
The agency said it expects Solera to have cash interest expenses of $710 million-$730 million in fiscal 2024 from about $500 million in fiscal 2022.
On the positive side, the agency said it expects leverage to decline to about 8x at the end of fiscal 2025 from the high-8x area in fiscal 2024.
“We also believe continued EBITDA growth and a potentially lower interest rate environment could result in significantly improved FOCF and liquidity in fiscal 2026,” S&P said.
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