Research Update: CD&R Firefly 4 (Motor Fuel Group) Outlook To Stable On Resilient Operating Performance And Consistent Deleveraging

We anticipate that forecourt operator CD&R Firefly 4 Ltd. (Motor Fuel Group) will demonstrate resilient performance throughout the pandemic thanks to its low operating leverage and high fuel margins, which more than offset the decline in demand. This will support a general improvement in MFG's credit metrics, including a gradual reduction in leverage to 6.3x-6.5x in 2020 and 2021 and robust free cash flow generation. We are therefore revising our outlook on MFG to stable from negative, and affirming our 'B' issuer credit rating. The stable outlook reflects the steady increase in headroom at the current rating level and expectations that even though fuel margins are expected to show a moderate decline in 2021, MFG will continue to reduce leverage,

...- We anticipate that forecourt operator CD&R Firefly 4 Ltd. (Motor Fuel Group) will demonstrate resilient performance throughout the pandemic thanks to its low operating leverage and high fuel margins, which more than offset the decline in demand. - This will support a general improvement in MFG's credit metrics, including a gradual reduction in leverage to 6.3x-6.5x in 2020 and 2021 and robust free cash flow generation. - We are therefore revising our outlook on MFG to stable from negative, and affirming our 'B' issuer credit rating. - The stable outlook reflects the steady increase in headroom at the current rating level and expectations that even though fuel margins are expected to show a moderate decline in 2021, MFG will continue to reduce leverage, so that debt-to-EBITDA gradually approaches 6.3x in 2021....

Research Update