Research Update: ITP Aero Affirmed At 'B' As Strong EBITDA Growth Offsets Dividend Recap; Outlook Stable

Propulsion (BC) Finco S.a.r.l. (ITP Aero) has issued a €250 million add-on to its existing €775 million term loan B. It will use the proceeds, together with €325 million cash on balance sheet, for a €450 million dividend distribution and to repay €169 million of preferred equity. The proposed dividend recap will result in thin rating headroom for the next 6-12 months, with S&P Global Ratings-adjusted leverage spiking to nearly 6.0x in 2024. However, we expect leverage to improve and trend toward 5.0x by end-2025, supported by strong revenue and EBITDA growth and complimentary acquisitions. We therefore affirmed our 'B' long-term issuer credit rating on ITP Aero and our 'B' issue rating on the senior secured notes. The stable outlook

...- Propulsion (BC) Finco S.a.r.l. (ITP Aero) has issued a 250 million add-on to its existing 775 million term loan B. It will use the proceeds, together with 325 million cash on balance sheet, for a 450 million dividend distribution and to repay 169 million of preferred equity. - The proposed dividend recap will result in thin rating headroom for the next 6-12 months, with S&P Global Ratings-adjusted leverage spiking to nearly 6.0x in 2024. - However, we expect leverage to improve and trend toward 5.0x by end-2025, supported by strong revenue and EBITDA growth and complimentary acquisitions. - We therefore affirmed our 'B' long-term issuer credit rating on ITP Aero and our 'B' issue rating on the senior secured notes. - The stable outlook reflects our expectation that ITP Aero's revenue and EBITDA will increase over the next 12 months, supported by organic growth and acquisitions. This will lead leverage to trend toward 5.0x by the end of fiscal year 2025 (ending Dec. 31) and comfortably...

Research Update