Bulletin: Soco1's Debt Add-On Is Within Our Expectations For The Rating

This report does not constitute a rating action. MILAN (S&P Global Ratings) Feb. 12, 2024--S&P Global Ratings said today that the €150 million fungible term loan B (TLB) add-on proposed by provider of testing, inspection, certification services Soco 1 (Socotec; B/Stable/--) is within our tolerances for the rating. The company will use the proceeds from the add-on to the €700 million TLB euro tranche to fund future acquisitions and transaction costs. Based on preliminary unaudited figures, Socotec beat our EBITDA generation expectations for 2023 with an expected S&P Global Ratings-adjusted figure of €231 million compared with our forecast of €221 million, thanks to lower exceptional costs. This corresponds to a 17.7% margin. Stronger cash flow generation also means that drawings

...The issue rating on the 1.115 billion senior secured TLB (including the 550 million original tranche, 150 million add on from June 2023 and proposed 150 million add on as well as the US$300 million tranche) is 'B' with a recovery rating of '4'. The recovery rating indicates our expectations of average recovery prospects (30%-50%; rounded estimate: 45%) constrained by some prior-ranking liabilities and the amount of first-lien debt....

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