Research Update: U.K.-Based CD&R Firefly 4 Ltd. (Motor Fuel Group) Affirmed At 'B' On Dividend Recapitalization; Outlook Stable

U.K.-based CD&R Firefly 4 Ltd. (Motor Fuel Group or MFG) recently announced that it plans to raise incremental senior secured debt of about £322 million-equivalent and pay up to £367 million dividend. The distribution will also be funded by £75 million of existing cash. The transaction includes refinancing of the second-lien loan resulting in its net repayment of about £17 million. We consider that resilient performance during pandemic and the successful integration of the MRH acquisition's operations indicate sustainable strengthening of the group's business model. We forecast that in 2021, MFG will report EBITDA in excess of £310 million, 4%-5% higher than in 2020. Gradual easing of pandemic-related restrictions, our expectation of fuel margins still exceeding their historical level, and

...- U.K.-based CD&R Firefly 4 Ltd. (Motor Fuel Group or MFG) recently announced that it plans to raise incremental senior secured debt of about ú322 million-equivalent and pay up to ú367 million dividend. The distribution will also be funded by ú75 million of existing cash. The transaction includes refinancing of the second-lien loan resulting in its net repayment of about ú17 million. - We consider that resilient performance during pandemic and the successful integration of the MRH acquisition's operations indicate sustainable strengthening of the group's business model. We forecast that in 2021, MFG will report EBITDA in excess of ú310 million, 4%-5% higher than in 2020. Gradual easing of pandemic-related restrictions, our expectation of fuel margins still exceeding their historical level, and the expansion of nonfuel activities will all support earnings growth. - We estimate that the transaction will temporarily inflate MFG's leverage such that S&P Global Ratings-adjusted debt to EBITDA...

Research Update