France-Based Scrap Recycling Company Groupe Ecore Holding Assigned 'B' Rating; Outlook Stable

  • We understand that Groupe Ecore Luxembourg is being voluntarily dissolved, with Groupe Ecore Holding (Ecore) becoming the group holding company.
  • In December 2018, Ecore successfully issued a €255 million senior secured bond and €40 million revolving credit facility to fund a €325 million dividend for its main shareholders, in line with our expectations.
  • We are assigning our 'B' ratings to Ecore and its €255 million senior secured bond.
  • The stable outlook reflects our view of Ecore's relatively supportive credit metrics and ample headroom under the existing rating, but also its relatively short track record under the current ownership, and lack of a defined financial policy.
PARIS (S&P Global Ratings) Jan. 10, 2019--S&P Global Ratings today assigned 
its 'B' long-term issuer credit rating to France-based scrap recycling company 
Groupe Ecore Holding, co-controlled by private equity firm H.I.G. Capital and 
the Dauphin family. The outlook is stable.

At the same time, we assigned our 'B' issue rating to Ecore's €255 million 
senior secured bond. The recovery rating is '3', reflecting our expectation of 
meaningful recovery (50%-70%; rounded estimate: 50%) in the event of default. 

These ratings are in line with the preliminary ratings we assigned on Nov. 9, 
2018, to the previous group holding company Groupe Ecore Luxembourg (see "
France-Based Scrap Recycling Company Groupe Ecore Luxembourg Assigned 
Preliminary 'B' Ratings; Outlook Stable" on RatingsDirect). There are no 
material changes to our key assumptions.

At the same time, we are withdrawing our preliminary ratings on Groupe Ecore 
Luxembourg. 

We understand that Groupe Ecore Luxembourg is being voluntarily dissolved, 
with Ecore now replacing it as the group holding company. This change has no 
impact on the group's structure or operations. 

The ratings reflect Ecore's successful issuance of a €255 million senior 
secured bond and €40 million revolving credit facility (RCF) to fund a €325 
million dividend for its main shareholders, in line with our expectations. 
These instruments were issued at the holdco level (Groupe Ecore Holding) and 
are guaranteed by topco Ecore B.V.

Our 'B' rating on Ecore reflects the company's relatively small size, but at 
the same time its comfortable leverage and ability to generate positive free 
cash flows. With the new capital structure in place, we expect the company's 
adjusted debt to EBITDA will be about 4.5x as of December 2018 and in 2019. 
Our current rating also reflects to some extent, the company's short track 
record under its new ownership, its lack of defined financial policy, but also 
our expectation that it will be able to maintain its current business model. 

We believe that the recent volatility in commodity prices, notably steel 
prices, will have limited impact on our previous forecasts. 

For more details, please refer to "Groupe Ecore Holding", published Dec. 6, 
2018, on RatingsDirect)