Research Update: Peer Holding III B.V. (Action) Upgraded To 'BB-' From 'B+' On Strong Recovery From The COVID-19 Pandemic; Outlook Stable

Value retailer Action (an operating subsidiary of Peer Holding III B.V.) significantly increased its EBITDA to about €1.1 billion in 2021 from €0.8 billion in 2020, despite store closures during COVID-19-induced lockdowns in Europe. This increase was spurred by about 21% reported revenue growth (of which 11% was like for like) and improved margins. The company has beaten our expectations and we expect leverage to decrease toward 3.5x over the next two years, from 3.9x in 2021, absent any dividend recapitalization. We therefore raised our long-term issuer credit and issue ratings on Action's parent Peer Holding III B.V. and its senior secured debt to 'BB-' from 'B+' and revised our recovery rating on the debt to '3' from '4'. The

...- Value retailer Action (an operating subsidiary of Peer Holding III B.V.) significantly increased its EBITDA to about 1.1 billion in 2021 from 0.8 billion in 2020, despite store closures during COVID-19-induced lockdowns in Europe. - This increase was spurred by about 21% reported revenue growth (of which 11% was like for like) and improved margins. - The company has beaten our expectations and we expect leverage to decrease toward 3.5x over the next two years, from 3.9x in 2021, absent any dividend recapitalization. - We therefore raised our long-term issuer credit and issue ratings on Action's parent Peer Holding III B.V. and its senior secured debt to '##-' from 'B+' and revised our recovery rating on the debt to '3' from '4'. - The stable outlook reflects our view that Action can continue to expand its store network, resulting in strong sales growth, robust margins, and increasing cash generation....

Research Update