SELECTA GROUP'S LIQUIDITY IMPROVED BY TAP TRANSACTION
Cham, 15. October 2019, Selecta Group BV (“Selecta” or “the group”, B3, stable), the leading route based unattended self-service coffee and convenience food provider in Europe by revenue, has announced its intention to complete a €150 million tap on its existing €1,090 million Euro Senior Secured Notes.
The proceeds of the tap issuance are going to be used to repay drawings under the group's €150 million revolving credit facility, and increase liquidity available to the group. The tap is fungible with the existing Notes.
We expect that Selecta's leverage, as measured by Moody's-adjusted debt/EBITDA will increase as a result of the transaction to 5.3x, based on the last 12 months ended 30 June 2019, up from 5.1x as at fiscal year 2018, ended 30 September 2018.
On balance the transaction is credit neutral as we expect that the group will use some of the cash proceeds for future growth opportunities, and that leverage will reduce towards 5x in the next 18-24 months driven by solid revenue growth and EBITDA margin improvements as the group completes the synergies initiatives currently ongoing. As a result the group’s B3 corporate family rating, B3-PD probability of default rating, B3 instruments ratings and stable outlook are all unaffected by the increase in debt.
Year to date results ended 30 June 2019 continue to show solid revenue growth and EBITDA growth on an adjusted basis as the realisation of the group's synergies initiatives continues. The group continues to face sizeable capital investments requirements, which together with bolt-on M&A transactions had resulted in limited liquidity available to the group prior to this transaction.