Selecta Group B.V.

The stable outlook indicates our expectations of improving, though negative, FOCF in the next 24 months to be counterbalanced by high-single-digit revenue growth, and a reduced cash interest burden as a result of the restructuring. We consider the group to be still dependent upon favorable business, financial, and economic conditions to meet its financial commitments over the longer term. We could lower the rating if the group underperforms our base case, which carries a heightened risk of a default and future distressed exchange. This could happen if the macroeconomic recovery is weaker than we expect, leading to subdued profitability and a deteriorating liquidity position that stresses Selecta's ability to service its debt. We could raise the rating should management successfully

...Selecta's credit metrics remain impaired by an uneven recovery, where sales derived from private workspace and semi-public areas (such as hospitals and universities) are still lagging relative to pre-pandemic 2019 levels and public areas. With the risk of continued COVID-19 infections and employers offering more opportunities for remote and hybrid working, we believe that a rapid acceleration in growth in the next 12 months is unlikely. We understand that Selecta is launching initiatives to adapt to changing workforce dynamics, including the further roll-out of contactless payment technology, and increasingly pushing its "Foodies" self-service catering points-of-sale, which offer a wide array of beverage and food solutions. These areas, which are typically installed in customer offices and maintained by Selecta technicians, present an alternative to the traditional catering solution in light of reduced worker volumes in offices. Though they present the opportunity for a ramp-up in profitability,...

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