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S&P rates EG Group notes B
S&P said it affirmed the B long-term issuer credit rating on EG Group Ltd. and assigned a B issue rating to the proposed senior secured notes issued by EG Global Finance plc.
EG Group has announced that it intends to issue €1.36 billion equivalent of senior secured notes to refinance the bridge facilities used to acquire 537 petrol stations from Woolworths in Australia, which closed earlier this year, the agency said, and fund two new acquisitions in the United States for a further 125 sites.
The agency said it views the transaction as mildly credit negative in light of these two additional U.S. acquisitions being entirely debt funded, thereby reducing the headroom under the current B rating on EG Group.
The stable outlook reflects an expectation that EG Group will de-leverage to about 7.5x in 2019 and post positive free operating cash flow on the back of a stable operating environment and decreasing acquisition activity relative to the enlarged group, S&P said.
S&P said it recognizes that these acquisitions will enhance EG's presence in the United States and will likely provide some synergies, but overall, they are considered as credit negatives.
The agency said it believes the resulting increase in leverage will reduce the headroom under the current B rating.
S&P said it now expects the company's adjusted debt-to-EBITDA of about 7.5x by the end of 2019, up from 7x previously.
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