S&P rates Stellagroup loan B

S&P said it assigned a preliminary B long-term issuer credit rating to Stellagroup, the intermediate parent company of Stella Group.

The outlook is stable.

The agency also said it assigned a preliminary B rating to the proposed €290 million term loan B due 2026 to be issued by Stellagroup.

The preliminary recovery rating is 3, indicating 50% to 70% expected default recovery.

At this stage, the proposed transaction includes shareholder loans, preferred equity shares and other debt-like instruments throughout the corporate group, S&P explained.

The B rating incorporates an assessment of Stella's fair business risk profile with an opinion that the group has a highly leveraged capital structure as a result of its private-equity ownership, the agency said.

Private-equity firm PAI Partners is acquiring Stella Group through Polaris Holding for an enterprise value of €635 million.

As part of this transaction, Stella plans to raise new debt and refinance its capital structure. The former owner ICG will remain a co-investor through a PIK instrument and a minority stake, S&P said.

The company's financial leverage at acquisition is high with an adjusted debt-to-EBITDA ratio of about 6.5x expected over the next 12- to 18-months, the agency said.

The company also is expected to maintain high margins and generate material free cash flows, S&P added.

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