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S&P cuts Bella Holding
S&P said it lowered its ratings on Bella Holding Co. LLC and its senior secured debt to B- from B. The 3 recovery rating on the debt, indicating meaningful (50%-70%; rounded estimate: 60%) recovery in default is unchanged. The agency also revised the outlook to stable from negative.
S&P concurrently assigned a B- long-term rating to Longshore Midco LLC, the parent of Bella Holding and issuer of the group's consolidated financial statements. The outlook on Longshore Midco is stable.
“Bella Holding's performance has been weaker than we expected. Revenue growth, cash flow generation, and the pace of deleveraging have lagged our expectations. This is partly attributed to pandemic-era disruptions leading to constrained growth prospects and use of services, a drop in client retention, and higher administrative expenses for initiatives focused on achieving longer-term scalability and operational efficiencies. We expect the business environment and opportunities for organic growth to normalize in 2023 as the impact of the pandemic continues to wane,” the agency said in a press release.
S&P said it estimates Bella will post S&P Global Ratings-adjusted debt-to-EBITDA leverage will be 7.5x-8x and 7x-7.5x in 2022 and 2023, respectively. “This compares to our previous forecast of adjusted leverage at 7x and 6.5x in 2022 and 2023, respectively.”
The improved outlook indicates Bella’s ratings will remain unchanged over the next 12 months. “We anticipate the company will have mid-to-high single-digit revenue growth, stable EBITDA margins, and lower FFO compared with the company's recent trend,” the agency said.
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