Research Update: Industrial Heat Exchange Solutions Supplier Arvos 'B-' Ratings Placed On CreditWatch Negative On Refinancing Risk

Arvos LuxCo is facing the maturity of its €33 million revolving credit facility and €112 million guarantee facility in May 2021 and about €380 million of term loan B in August 2021, less than 12 months away. With weaker-than-expected operating performance, including the negative FOCF generation over the past two years, we believe that refinancing risk amid challenging capital markets conditions is increasing. We are therefore placing our 'B-' issuer credit and issue ratings on Arvos on CreditWatch negative. The '3' recovery rating (rounded estimate 50% recovery) for the senior secured facility is unchanged. The CreditWatch placement reflects the likelihood that we could lower the ratings by up two notches if Arvos fails to complete its planned refinancing within the

...- Arvos LuxCo is facing the maturity of its 33 million revolving credit facility and 112 million guarantee facility in May 2021 and about 380 million of term loan B in August 2021, less than 12 months away. - With weaker-than-expected operating performance, including the negative FOCF generation over the past two years, we believe that refinancing risk amid challenging capital markets conditions is increasing. - We are therefore placing our 'B-' issuer credit and issue ratings on Arvos on CreditWatch negative. The '3' recovery rating (rounded estimate 50% recovery) for the senior secured facility is unchanged. - The CreditWatch placement reflects the likelihood that we could lower the ratings by up two notches if Arvos fails to complete its planned refinancing within the next 30 days. We could also lower the rating if we believe that the capital structure is unstainable over the long term and that the company's FOCF generation will not recover and turn positive....

Research Update