Moody's ups Atalian, rates notes Caa3

Moody's Ratings said it upgraded La Financiere Atalian SAS' probability of default rating to Caa3-PD from D-PD and assigned a Caa3 instrument rating to Atalian's new €836 million of backed senior secured notes due June 2028.

Concurrently, the agency affirmed Atalian's Caa3 corporate family rating. The outlook remains stable.

Atalian issued the new notes following the completion of its exchange offer. Through the exchange offer, the previously outstanding €625 million of backed senior notes due May 2024, and €350 million and £225 million of backed senior notes, both due May 2025 were partly exchanged into the new notes and partly repaid in €400 million cash.

“The rating action to upgrade Atalian's PDR to Caa3-PD mainly reflects the extension of the debt maturity to 2028 and the lower cash burn because part of the interest on the new notes is in the form of payment-in-kind (PIK) thanks to the issuance of the new notes,” Moody’s said in a press release.

Even with the new capital structure, which slashed its cash interest payment by more than half to €30 million per year from €71 million paid in 2023, the agency said it expects Moody's adjusted free cash flow/debt will stay negative over the next 18 months, due to a longer recovery in earnings than Moody's previously expected.

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