Research Update: Arvos LuxCo Downgraded To 'CC' On Virtual Certainty Of Default; Outlook Negative

Industrial heat exchange solutions provider Arvos LuxCo S.a.r.l. reached a lock-up agreement with some of its creditors regarding a financial restructuring of its 2024 debt maturities. We think Arvos' default is a virtual certainty because the proposed distressed debt exchange, which we expect to be completed within the next three months, does not provide for the obligations to be fulfilled as originally promised. We therefore lowered to 'CC' from 'CCC' our ratings on Arvos and on its senior secured facilities. The '3' recovery ratings on the facilities remain unchanged, indicating our expectation of average recovery prospects (50%-70%, rounded estimate 50%) in a default scenario. The negative outlook reflects that we would assess the proposed restructuring as a default if executed

...- Industrial heat exchange solutions provider Arvos LuxCo S.a.r.l. reached a lock-up agreement with some of its creditors regarding a financial restructuring of its 2024 debt maturities. - We think Arvos' default is a virtual certainty because the proposed distressed debt exchange, which we expect to be completed within the next three months, does not provide for the obligations to be fulfilled as originally promised. - We therefore lowered to '##' from '###' our ratings on Arvos and on its senior secured facilities. The '3' recovery ratings on the facilities remain unchanged, indicating our expectation of average recovery prospects (50%-70%, rounded estimate 50%) in a default scenario. - The negative outlook reflects that we would assess the proposed restructuring as a default if executed as proposed, and captures our view that the group may stop servicing its debt as originally scheduled....

Research Update