S&P cuts Arvos

S&P said it cut Arvos LuxCo Sarl and its senior secured facilities to CCC from B-. The recovery rating remains 3, indicating an average (rounded estimate 50%) recovery in default. The agency removed the ratings from CreditWatch, where they were placed with negative implications on Oct. 1.

Earlier this month, Arvos amended and extended its credit facilities. “We expect Arvos to continue performing weakly and burning cash, and envision a specific default scenario, that is, minimum EBITDA covenant breach if the company fails to perform in line with the base case and improve profitability in the next 12 months,” S&P said in a press release.

The new conditions require Arvos to hire an M&A advisor by Oct. 31, 2021 to facilitate the sale of part of its business, representing 40% of EBITDA by March 2023. This sale requirement includes a pro-rata mandatory prepayment of 100% of net cash proceeds from any material sale, including equal de-risking of all lenders, the agency said.

The outlook is negative.

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