Research Update: Italy-Based Gamenet Group S.p.A. Downgraded To 'B' On Apollo Acquisition And COVID-19 Effects; Outlook Negative

Private-equity firm Apollo Global Management (Apollo) completed the acquisition of Gamenet Group S.p.A (Gamenet) in Feb. 2020, in a public-to-private leveraged buyout (LBO) transaction. Gamenet's adjusted leverage reached 4.9x in 2019 under the new capital structure, compared with our previous forecast of 3.6x when the company was public. The COVID-19 pandemic has led to the temporary closure of Gamenet's retail network and suspension of sports events, leading us to forecast credit metrics will weaken in 2020, with S&P Global Ratings-adjusted leverage potentially increasing toward 8x in our base case, before a full recovery in 2021, and liquidity remaining adequate throughout. We are lowering our long-term issuer credit and issue ratings on Gamenet and its debt to 'B' from 'B+', with

...- Private-equity firm Apollo Global Management (Apollo) completed the acquisition of Gamenet Group S.p.A (Gamenet) in Feb. 2020, in a public-to-private leveraged buyout (LBO) transaction. - Gamenet's adjusted leverage reached 4.9x in 2019 under the new capital structure, compared with our previous forecast of 3.6x when the company was public. - The COVID-19 pandemic has led to the temporary closure of Gamenet's retail network and suspension of sports events, leading us to forecast credit metrics will weaken in 2020, with S&P Global Ratings-adjusted leverage potentially increasing toward 8x in our base case, before a full recovery in 2021, and liquidity remaining adequate throughout. - We are lowering our long-term issuer credit and issue ratings on Gamenet and its debt to 'B' from 'B+', with the recovery ratings on the senior notes unchanged at '3' (rounded estimate 65%). - The negative outlook reflects downside risks to our base case, such as a prolonged shutdown or weak recovery that...

Research Update