Research Update: U.K.-Based Engineering And Construction Group Kier And Proposed Notes Rated Preliminary 'BB-'; Outlook Stable

Kier Group PLC plans to raise up to £250 million of senior unsecured notes to refinance its existing capital structure. We anticipate that Kier will sustain its improved profitability in 2024-2025, and its cash generation will normalize after the significant working capital cash inflow in 2023. We assigned our preliminary 'BB-' ratings to Kier Group PLC and to the proposed up to £250 million senior unsecured notes and assigned a preliminary recovery rating of '3' to the notes. The stable outlook reflects Kier's improved earnings and cash generation in 2023 and our expectation that cash generation will normalize in 2024, as well as our forecast that adjusted funds from operations (FFO) to debt will be about 30%-35% in 2024 and

...- Kier Group PLC plans to raise up to ú250 million of senior unsecured notes to refinance its existing capital structure. - We anticipate that Kier will sustain its improved profitability in 2024-2025, and its cash generation will normalize after the significant working capital cash inflow in 2023. - We assigned our preliminary '##-' ratings to Kier Group PLC and to the proposed up to ú250 million senior unsecured notes and assigned a preliminary recovery rating of '3' to the notes. - The stable outlook reflects Kier's improved earnings and cash generation in 2023 and our expectation that cash generation will normalize in 2024, as well as our forecast that adjusted funds from operations (FFO) to debt will be about 30%-35% in 2024 and operating cash flow (OCF) to debt at about 20%....

Research Update