Research Update: Spain-Based KronosNet Outlook Revised To Negative On Delayed Integration Of Comdata; ?B+? Rating Affirmed

The merger between customer relationship management (CRM) and business process outsourcing (BPO) services providers Konecta and Comdata closed in October 2022, several months after the anticipated date, leading to delays in the implementation of synergies. As a result, we now forecast weaker-than-expected performance for the group's holding company, KronosNet Topco S.L. (KronosNet), which will result in S&P Global Ratings-adjusted leverage above 5.0x by year-end 2023, at 5.3x, and weaker cash flows. We therefore revised our outlook on KronosNet and its subsidiary, KronosNet CX Bidco 2022 S.L., to negative from stable, while affirming our 'B+' ratings on both entities and the group's senior unsecured €753.5 million term loan B (TLB); the recovery rating on the debt remains at '3', indicating our

...- The merger between customer relationship management (CRM) and business process outsourcing (BPO) services providers Konecta and Comdata closed in October 2022, several months after the anticipated date, leading to delays in the implementation of synergies. - As a result, we now forecast weaker-than-expected performance for the group's holding company, KronosNet Topco S.L. (KronosNet), which will result in S&P Global Ratings-adjusted leverage above 5.0x by year-end 2023, at 5.3x, and weaker cash flows. - We therefore revised our outlook on KronosNet and its subsidiary, KronosNet CX Bidco 2022 S.L., to negative from stable, while affirming our 'B+' ratings on both entities and the group's senior unsecured 753.5 million term loan B (TLB); the recovery rating on the debt remains at '3', indicating our expectation of about 50% recovery in the event of default. - The negative outlook indicates the likelihood of a downgrade if KronosNet does not deleverage below 5x and improve its free operating...

Research Update