Research Update: Spanish Aero-Engine Module And Component Supplier Propulsion (BC) Finco Assigned Preliminary 'B' Rating; Outlook Stable

Propulsion (BC) Finco S.a.r.l., controlled by Bain Capital and minority Spanish investors, is raising funds to acquire ITP S.A., a Spanish aerospace and defense supplier of modules and components. The company plans to issue a €575 million-equivalent senior secured term loan for the acquisition. The transaction is subject to customary regulatory approvals. We expect that ITP will continue to benefit from its position as a Tier 1 supplier of engine modules and components on high-growth engine platforms, such that S&P Global Ratings-adjusted EBITDA margins return to about 10% by 2023, with sound free operating cash flow (FOCF) generation. If the deal closes as expected, ITP's S&P Global Ratings-adjusted debt to EBITDA would be about 6.0x–6.5x in 2022, excluding one-off merger

...- Propulsion (BC) Finco S.a.r.l., controlled by Bain Capital and minority Spanish investors, is raising funds to acquire ITP S.A., a Spanish aerospace and defense supplier of modules and components. The company plans to issue a 575 million-equivalent senior secured term loan for the acquisition. The transaction is subject to customary regulatory approvals. - We expect that ITP will continue to benefit from its position as a Tier 1 supplier of engine modules and components on high-growth engine platforms, such that S&P Global Ratings-adjusted EBITDA margins return to about 10% by 2023, with sound free operating cash flow (FOCF) generation. If the deal closes as expected, ITP's S&P Global Ratings-adjusted debt to EBITDA would be about 6.0x¡6.5x in 2022, excluding one-off merger and acquisition (M&A) fees and debt-like preferred equity from our calculations. For 2023, we expect leverage to reduce to below 6.0x due to EBITDA growth. - We therefore assigned our preliminary 'B' long-term issuer...

Research Update