Research Update: Akita MidCo Sarl, New Parent Of Chemical Distributor Azelis, Assigned Preliminary 'B' Rating; Outlook Stable

Chemical distributor Azelis Finance S.A. is being acquired by private equity owner EQT VIII fund (EQT) and the Public Pension Investment Board (PSP), with a financing package including about €1.1 billion in term loans. We estimate this will result in Azelis' adjusted debt to EBITDA increasing to about 8x in 2018, although we expect that profit growth and free cash flow generation should help reduce leverage in coming years. We are assigning our preliminary 'B' rating to the group's new parent and owner Akita Midco Sarl, assigning our preliminary 'B' issue-level ratings to Akita's proposed first-lien debt, and affirming our 'B' rating on Azelis. The stable outlook on both entities reflects our expectation of the group's positive free cash flow

...+ Chemical distributor Azelis Finance S.A. is being acquired by private equity owner EQT VIII fund (EQT) and the Public Pension Investment Board (PSP), with a financing package including about 1.1 billion in term loans. + We estimate this will result in Azelis' adjusted debt to EBITDA increasing to about 8x in 2018, although we expect that profit growth and free cash flow generation should help reduce leverage in coming years. + We are assigning our preliminary 'B' rating to the group's new parent and owner Akita Midco Sarl, assigning our preliminary 'B' issue-level ratings to Akita's proposed first-lien debt, and affirming our 'B' rating on Azelis. + The stable outlook on both entities reflects our expectation of the group's positive free cash flow in the coming years and favorable interest coverage ratios....

Research Update