Research Update: Bright Bidco BV 'CCC+' Credit Rating Affirmed On Lamps And Accessories Disposal; Outlook Negative; Issue Rating Lowered

Lighting solutions manufacturer Bright Bidco B.V. (doing business as Lumileds) signed an agreement to dispose of its lamps and accessories business to First Brands Group LLC in May 2024, and expects to close the transaction in June 2024. The company intends to use half of the $200 million of net proceeds to reduce its debt and the rest to fund its working capital and capital expenditures (capex). Although this somewhat alleviates the company's potential liquidity shortfall over the next 12 months, we expect high investments into Lumileds remaining LED business will quickly deplete the additional liquidity buffer. We therefore affirmed our 'CCC+' long-term issuer rating on Lumileds. We also lowered our issue rating on the company's exit term loan to

...- Lighting solutions manufacturer Bright Bidco B.V. (doing business as Lumileds) signed an agreement to dispose of its lamps and accessories business to First Brands Group LLC in May 2024, and expects to close the transaction in June 2024. - The company intends to use half of the $200 million of net proceeds to reduce its debt and the rest to fund its working capital and capital expenditures (capex). - Although this somewhat alleviates the company's potential liquidity shortfall over the next 12 months, we expect high investments into Lumileds remaining LED business will quickly deplete the additional liquidity buffer. - We therefore affirmed our '###+' long-term issuer rating on Lumileds. We also lowered our issue rating on the company's exit term loan to '###+' from 'B-'. - The negative outlook reflects the risk that Lumileds is unable to restore stronger earnings and cash flows at its LED segment, leading to a fresh liquidity shortfall despite the expected cash inflow from the disposal...

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