June 22 (SeeNews) - Standard & Poor's (S&P) is placing its 'BB' ratings on Bulgarian animal health products and feed additives manufacturer Huvepharma EOOD on CreditWatch with positive implications as the company's owner started a formal process for an initial public offering (IPO) on the Amsterdam Stock Exchange, the ratings agency said.
"Assuming the process completes with the company receiving the envisaged amounts, we project S&P Global Ratings-adjusted debt to EBITDA to improve to around 1.2x-1.3x. The company intends to maintain net debt to EBITDA of 2.0x or below, which supports a higher rating," S&P said in a statement.
Last week, Dutch-registered Huvepharma BV unveiled plans to list on Euronext Amsterdam. The offer is expected to comprise a primary offering of newly issued shares worth approximately 300 million euro ($357.1 million) and a secondary offering of existing shares by the company’s sole shareholder, Bulgaria-registered Advance Properties, Huvepharma BV said back then.
Huvepharma BV also said it intends to use the proceeds from the offering to fund and accelerate its growth capital expenditures as well as to its cut debt that stood at about 474.1 million euro as of December 31, 2020.
Sofia-based Huvepharma EOOD is owned by Bulgaria's Huveproject, which is a wholly-owned unit of Huvepharma BV, according to data published on the website of the Bulgarian commercial register.
"We expect to resolve the CreditWatch in the next three months, once the transaction completes and we evaluate the company's business prospects and financial policy," S&P also said in its statement. "We think that a successful listing will reduce adjusted debt leverage to significantly below 2.0x, but that the company will progressively deploy these proceeds for organic growth opportunities. We think that sizable growth capex will constrain FOCF generation and will likely limit the rating uplift to 'BB+', should the company successfully complete the transaction," S&P added.
($ = 0.84015 euro)