Moody's cuts Consolis

Moody's Investors Service said it downgraded the long-term corporate family rating of Compact Bidco BV (Consolis Group SAS) to Caa1 from B3, the probability of default rating to Caa1-PD from B3-PD and the instrument rating on its €300 million guaranteed senior secured notes due 2026 to Caa2 from Caa1.

“Consolis credit metrics remained very weak with Moody's adjusted gross leverage (debt/ EBITDA) of around 8x and interest coverage (EBIT/ Interest) of 0.6x at the end of June 2023, which raises questions on the long-term sustainability of its capital structure.

“Despite having raised debt in May 2021 at fixed rates, Consolis' interest coverage ratio is very weak and there is a risk that it will be even weaker once the company needs to refinance at potentially higher rates - the €300 million senior secured notes are due in May 2026, but the €75 million revolving credit facility (RCF) matures six months earlier and the €30 million real-estate backed facility is coming due in May 2025,” Moody’s said in a press release.

The agency said it expects Consolis’ leverage ratio to weaken towards 9x by the end of 2023 and hover in the range of 8x-9x through 2024 before a meaningful earnings recovery in 2025 could trim the ratio towards 7x.

The outlook remains negative.

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