S&P rates Acacium, loan B

S&P said it assigned B ratings to Acacium Group Ltd. and its planned £375 million term loan. The loan’s recovery rating is 3. The loan will be issued through financing subsidiary Impala Bidco 0 Ltd.

Funds from operations (FFO) cash interest coverage will remain buoyant and more than 3x over FY2021-FY2023 in the agency’s base case. Acacium is relatively asset-light (capital expenditure [capex] historically below 1% of revenue), and management intends to further invest in digitization and improving customer experience and worker productivity through a range of technology applications and solutions, the agency noted.

“This could boost the group's competitive positioning in the medium term, and its ability to generate FOCF, with our base case forecasting FOCF of £22 million-£36 million in FY2021-FY2022,” S&P said in a press release.

The proceeds will be partly used to repay the £313 million debt facility, which comprises a £268 million term loan and £45 million of incremental debt raised for mergers and acquisitions purposes in 2021. The remainder of the will be used to repay a £53 million shareholder loan.

The outlook is stable. The stable outlook reflects our expectation that Acacium's credit metrics will remain robust in the next two years. We expect that EBITDA margins in the 10%-11% range, and positive annual FOCF of about £22 million and £36 million in FY2021 and FY2022, respectively, will support deleveraging over the next two years,” S&P said.

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