S&P lowers Euro Garages, rates loan B

S&P said it affirmed the B long-term corporate credit rating on Intervias Group Ltd., the parent company of filling station operator Euro Garages.

The outlook is stable.

The agency also said it lowered the rating on the group's £650 million equivalent senior secured credit facilities to B from B+.

S&P also said it revised the recovery rating on these facilities to 3 from 2, indicating 50% to 70% expected default recovery.

The agency also said it assigned a B rating to the proposed £750 million senior secured credit facilities.

The recovery rating of 3 on these facilities indicates 50% to 70% expected default recovery.

The affirmation follows news that Euro Garages plans to merge with European Forecourt Retail Group BV.

S&P also said it affirmed European Forecourt’s B long-term corporate credit rating.

The outlook is stable.

The transaction is still pending regulatory approval and the company expects this to be completed in November, the agency said.

The combined group's capital structure is expected to remain highly leveraged after the transaction with its adjusted debt-to-EBITDA ratio of about 8.5x over the next two years, including about £530 million to £580 million of preference shares, S&P said.

There is almost no headroom under the credit metrics at the current rating level, the agency added.

The transaction adds about £340 million of incremental senior secured debt to the combined group's balance sheet, S&P said.

But the agency noted the cash-preservative nature of the preference shares and an expectation for healthy free operating cash flow, the agency said.

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