S&P rates IM Growth notes B-

S&P said it assigned preliminary B- ratings to IM Growth SAS, the holding company for Isabel Marant, and the proposed €200 million of senior secured notes that will be used to refinance its capital structure and distribute dividends to shareholders, including the cofounders and Montefiore Investment. Isabel Marant will sell the notes, which S&P assigned a recovery rating of 3 to indicate the expectation of recovery in the 50%-70% range (rounded estimate 60%) in the event of a default.

The outlook is stable. “The stable outlook reflects our expectation that IM will generate adjusted EBITDA margin of 25%-26% in the next 12 months and maintain adjusted debt to EBITDA of 5x-5.5x and FFO cash interest coverage of 2x-2.5x. We expect the increase in marketing spending will erode the company's EBITDA margin in the coming years but support revenue growth. We also expect the company will generate positive FOCF of €5 million-€10 million over the next 12-18 months,” said S&P in a press release.

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