S&P rates Hut Group loan B-

S&P said it assigned preliminary ratings of B- to The Hut Group Ltd. and its proposed £510 million senior secured loan due 2026.

Proceeds will be used to refinance debt.

The company also plans to spin off real estate assets to a subsidiary, which S&P expects to raise a £193 million facility.

“Our rating on U.K.-based online retailer THG reflects the company’s high growth potential, its strong position in the online premium beauty and sport nutrition markets, a track record of efficient global distribution, and an ample liquidity buffer, sufficient to cover more than three years of operations. At the same time, the assessment is constrained by the high leverage, the company’s relatively limited scale in global markets, and its high investment requirements, which would result in negative free operating cash flow (FOCF) generation and a low profitability level in the near term,” said S&P in a press release.

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