S&P cuts Keter Group to SD

S&P said it lowered its issuer credit rating on Keter Group BV to SD (selective default) from CC/negative and the issue ratings on a term loan B and revolver to D from CC.

S&P said it expects to raise the ratings on Keter and on the new term loan B to the B category over the next few days as the company implements the new capital structure and given S&P’s expectations of Keter’s operating performance over 2024-2025.

On April 25, Keter received lenders' consent to implement its capital restructuring, with implementation having taken place on April 29.

The former capital structure comprised a €1.246 billion first-lien term loan B, a €106 million first-lien revolving credit facility and a €50 million super-senior bridge loan. The transaction entails €725 million of first-lien debt being converted into a new term loan B due in December 2029 and the remaining debt of €652 million into a new holdco payment-in-kind facility that sits outside the restricted group and is due in December 2029.

Together with capitalized transaction fees, the post-transaction balances will be €728 million of new term loan B and €698 million of holdco PIK notes. The existing €50 million super-senior bridge loan maturing in 2026 remains in place.

“We view the transaction as a distressed exchange and tantamount to default considering lenders will receive less than originally promised without adequate compensation in return,” S&P said in a news release.

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