S&P assigns Propulsion, loan B

S&P said it assigned B ratings to Propulsion (BC) Finco Sarl and its $667 million senior secured term loan. Propulsion also secured an unrated $116 million revolver. The recovery rating on the loan is 3, indicating meaningful (50%-70%; rounded estimate: 60%) recovery prospects at default.

Propulsion, controlled by investors led by Bain Capital, acquired Industria de Turbo Propulsores, SA for $1.7 billion, including fees and expenses.

“We expect FOCF will be moderately positive in 2023. Historically, ITP has been able to generate significant FOCF. On a stand-alone basis, ITP's S&P Global Ratings-adjusted FOCF was about €163 million in 2019, €96 million in 2020, and fell to €43 million in 2021 because of the pandemic's impact on deliveries in the wide-body segment and a reduction in the defense aftermarket after a strong operating performance in 2020.

“For 2022, we anticipate that FOCF will turn negative because of transaction fees and expenses, which are fully funded with equity; without these, ITP's FOCF would have been broadly neutral,” S&P said in a press release.

The outlook is stable.

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