Moody’s rates Euro Ethnic B2, loans B1

Moody’s Investors Service said it assigned Electra Bidco (Euro Ethnic Foods) B2 corporate family and B2-PD probability of default ratings. Concurrently, Moody’s assigned a B1 rating to the €465 million senior secured first-lien term loan B and a B1 rating to the €50 million senior secured revolving credit facility to be raised by EEF. The outlook assigned is stable.

“The B2 CFR reflects EEF’s earnings growth on the back of robust like-for-like sale growth rates and store openings; its presence within the Grand Frais fresh food store, which grows faster than the traditional French grocery market due to growing customer preferences for fresh and healthy products; its positive free cash flow generation; its high profitability, with a Moody’s-adjusted EBITDA margin of around 22% in fiscal 2020 (ending on Sept. 30); and its focus on high quality healthy and international products, which differentiates the company from its competitors,” Moody’s said in a press release.

The term loan issued and the revolver are rated a notch above the CFR, reflecting their more senior ranking in the waterfall and the buffer provided by the €75 million second lien instrument, the agency said.

The outlook reflects the expectation EEF will deleverage towards 6x Moody’s-adjusted (gross) debt/EBITDA in the next 12 to 18 months by continuing to grow its revenues and EBITDA, Moody’s said.

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