Fitch lowers Loire

Fitch Ratings said it downgraded Loire UK Midco 3 Ltd.’s expected senior secured debt instrument rating to B+/RR4/49% from BB-/ RR3/52%. Fitch affirmed Loire’s expected long-term issuer default rating at B+.

The downgrade reflects the adverse effect on recovery prospects from a £40 million add-on to its term loan currently in syndication, increasing total senior secured debt to £1.082 billion under the group’s revised capital structure. The additional incremental proceeds will be used to reduce the sponsor’s initial equity contribution.

The expected B+ IDR reflects a defensive business risk profile balanced with high leverage and a modest scale. The rating is underpinned by structural organic growth prospects for the life-science and healthcare industries, high barriers-to-entry, as well as strong profitability and free cash flow generation, Fitch said.

The IDR, however, is constrained by the still modest size of Loire, its significant financial leverage as well as our assumption that Loire will continue to be an active consolidator in the fragmented global life sciences tools markets, which is likely to prevent material deleveraging over our four-year rating horizon to March 2024, the agency said.

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