Fitch views TK Elevator negatively

Fitch Ratings said it revised the outlook on TK Elevator Holdco GmbH (TKE) to negative from stable and affirmed its long-term issuer default rating at B. The agency also affirmed the senior secured debt of TK Elevator Midco GmbH and TK Elevator U.S. Newco, Inc. at B+/RR3 and TKE's senior unsecured rating at CCC+/RR6.

The weaker outlook reflects the view that the company's key financial metrics will remain below the expected level for a B rating longer than previously forecast, Fitch said.

“The company's gross and net leverage remained significantly above our prior expectations at the financial year ending September 2022 (FY22). If these metrics remain above the downgrade sensitivities through the medium term, it will likely result in a downgrade. Fitch also expects that TKE's free cash flow (FCF) margins could remain outside the downgrade sensitivity of 2% until FY24, and they are highly dependent on working capital flows,” the agency said in a press release.

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