Italian IT Services Group Engineering SpA (Centurion Bidco SpA) Assigned Prelim ?B? Rating; Outlook Stable

Centurion Bidco SpA, owner of Italian IT services group Engineering SpA, is issuing senior secured notes of about €640 million, alongside €216 million of payment-in-kind (PIK) notes, to finance a secondary leveraged buyout of the company, raising adjusted leverage to 8.1x in 2020 from 7.3x in 2019. As the largest local IT player, Engineering benefits from entrenched relationships with its customers, solid organic growth since 2003, and sound free cash flow generation, while also fighting off competition from global IT services players. However, Engineering's operations are limited to Italy (86% of revenues), with moderate customer concentration, and it operates in a highly fragmented IT services market with moderate profitability. It also competes against larger, better-capitalized global IT services players. We

...June 24, 2020 - Centurion Bidco SpA, owner of Italian IT services group Engineering SpA, is issuing senior secured notes of about 640 million, alongside 216 million of payment-in-kind (PIK) notes, to finance a secondary leveraged buyout of the company, raising adjusted leverage to 8.1x in 2020 from 7.3x in 2019. - As the largest local IT player, Engineering benefits from entrenched relationships with its customers, solid organic growth since 2003, and sound free cash flow generation, while also fighting off competition from global IT services players. - However, Engineering's operations are limited to Italy (86% of revenues), with moderate customer concentration, and it operates in a highly fragmented IT services market with moderate profitability. It also competes against larger, better-capitalized global IT services players. - We are assigning our preliminary 'B' issuer credit rating to Engineering SpA and our preliminary 'B' issue rating to the proposed senior secured notes. - Our stable...

Ratings Action