Moody’s rates European Crops, facilities B2

Moody's Investors Service said it assigned a B2 corporate family rating and a B2-PD probability of default rating to European Crops Products 2 Sarl, the parent company of Broccoli Portugal SA, which is the owner of a group of companies operating in the specialty agrochemical sector (Sapec Agro).

Concurrently, the agency assigned a B2 rating to European Crops’ senior secured term loan B due 2025 and senior secured revolving credit facility expiring in 2024.

The outlook is stable.

The new ratings were assigned in the context of the refinancing and maturity extension for a further 24 months of the group's existing term loan B and revolver, in parallel with an add-on to term loan B of around €130 million. The additional debt will be used for general corporate purposes and to fund a €72 million distribution to shareholders.

Moody’s said the B2 corporate family rating is primarily constrained by (a) The high leverage that European Crops will exhibit immediately post refinancing with Moody's adjusted total debt to EBITDA of 6.5 times at the end of June 2018, on a pro-forma basis (i.e. including a full-year contribution from recent acquisitions); and (b) the low free cash flow after capex (FCF) coverage of debt stemming from the high debt burden and resulting interest payments. ECP's rating is further constrained by the relatively small scale of its operations and high, albeit reducing, exposure to the Iberian agricultural markets.

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