S&P snips Accell

S&P said it lowered its ratings on Accell Group (Sprint HoldCo BV) and its senior secured term loan to CCC+ from B- and removed them from CreditWatch with negative implications where they were placed on Oct. 5. The outlook is now negative.

“Unfavorable working capital dynamics continue to affect Accell Group's FOCF after leases, forcing recourse to external debt to meet operational and financial commitments. Over the first nine months of 2023, the company reported negative FOCF of about €200 million, of which €165 million was consumed by a severe deterioration of working capital stock,” S&P said in a press release.

The agency said it no longer expects Accell Group’s working capital position to start to normalize in the second half of 2024 but in 2025. “We forecast the working capital stock will remain high at about 75%-80% of total revenue in 2023 and about 65% in 2024, compared with our previous expectations of about 55% in both years and about 35% in 2019.”

The negative outlook mirrors the view that the company’s increased finished product inventory and deep discounts from bike manufacturers suggest a “fragile and slow recovery in the European bike industry. This could prevent Accell Group from restoring an adequate liquidity position and increase the likelihood of default events,” S&P explained.

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