S&P gives Accell, loan B

S&P said it preliminarily assigned B ratings to Sprint HoldCo BV, the new holding company for Accell Group, and its planned €700 million senior secured term loan. The loan’s recovery rating preliminarily is 3, indicating about a 65% recovery in default. Sprint Holdco also plans to secure a €180 million senior secured revolving credit facility, which will be undrawn at close.

KKR and shareholder Teslin Capital Management agreed to buy Accell for about €1.9 billion in a public-to-private leveraged buyout. Besides using the loans for the acquisition and to refinance debt, KKR will contribute €1.3 billion of pure equity for about an 88% stake.

“Our preliminary issuer credit rating primarily reflects financial-sponsor ownership and a capital-intensive business model,” the agency said in a press release.

The outlook is stable. “The stable outlook reflects our expectations that the company will pursue its EBITDA growth, due to strong tailwinds in the electric bikes market, such that S&P Global Ratings-adjusted leverage will remain stable at about 5x on a sustainable basis and free operating cash flow (FOCF) to debt will remain stable at about 2.5%-3% in the next 12-to-18 months, despite challenges in the supply chain,” S&P said.

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