Research Update: France-Based Fresh Food Retailer ZF Invest Assigned ?B? Ratings On Refinancing; Outlook Stable

ZF Invest, the holding company of Prosol Group, issued a €1,382 million term loan B (TLB) and a €250 million revolving credit facility (RCF) to refinance €759 million of existing debt and repurchase €741 million of shareholders' convertibles. Together with business partners, the group operates the fruit and vegetables, seafood and diary segments of Grand Frais, a French specialist food retailer with 238 stores as of September 2020. Additionally, the group independently operates the smaller Fresh and Banco Fresco chains, as well as the newly launched e-commerce platform monmarché.fr. The transaction materially increased ZF Invest's financial debt, and we estimate that S&P Global Ratings-adjusted debt to EBITDA will reach 7.4x-8.1x (or 6.6x-7.2x when excluding the shareholders' convertibles) over fiscal years

...- ZF Invest, the holding company of Prosol Group, issued a 1,382 million term loan B (TLB) and a 250 million revolving credit facility (RCF) to refinance 759 million of existing debt and repurchase 741 million of shareholders' convertibles. - Together with business partners, the group operates the fruit and vegetables, seafood and diary segments of Grand Frais, a French specialist food retailer with 238 stores as of September 2020. Additionally, the group independently operates the smaller Fresh and Banco Fresco chains, as well as the newly launched e-commerce platform monmarchT.fr. - The transaction materially increased ZF Invest's financial debt, and we estimate that S&P Global Ratings-adjusted debt to EBITDA will reach 7.4x-8.1x (or 6.6x-7.2x when excluding the shareholders' convertibles) over fiscal years 2021-2022 (ending Sept. 30). Over the same period, we expect substantial expansionary capital expenditure (capex) will constrain free operating cash flow (FOCF). - This is mitigated...

Research Update