S&P trims Takko

S&P said it downgraded Takko and its senior secured debt rating to CCC+ from B-, citing a loss of revenue from government-mandated closures to prevent the spread of the coronavirus and the risk of a covenant breach.

“Robust liquidity as of October 2019 will likely come under pressure in the next few months. Takko reported €76.8 million of cash on the balance sheet as of Oct. 31, 2019, in addition to about €62 million available on its revolving credit facility (RCF), which is a relatively high point in light of the group's history supported by the solid operating performance we estimate for fiscal year 2019,” said S&P in a press release.

“However, liquidity could still rapidly deteriorate in our view. The group's diminishing covenant headroom makes it dependent on its pool of lenders for sufficient liquidity over the next few months. Moreover, failure to obtain a cancellation of rent payments and deferral of payments to suppliers will likely weaken its liquidity cushion,” the agency said.

The outlook is negative.

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