oOn Nov. 26, Europcar Mobility Group announced it would not be making the interest payments due on its 2024 and 2026 senior notes prior the end of the 30-day grace period it elected to use on Oct. 26, 2020.
oOn Nov. 25, Europcar reached an agreement with a group of cross-party creditors to enter into a lock-up agreement to pursue debt restructuring, in connection with which Europcar intends to fully equitize the 2024 and 2026 senior notes, and capitalize the interest due on these instruments.
oWe are lowering our issuer credit rating on Europcar Mobility Group to 'SD' (selective default) from 'CC' and our issue credit ratings on the affected instruments, the 2024 and 2026 senior notes, to 'D' from 'C'.
oThis rating action does not affect the 'CC' issuer credit rating on Europcar International SASU, the 'CCC-' issue rating on the revolving credit facility (RCF), or the 'CC' issue rating on the fleet bond, all of which remain unchanged.
oWe will evaluate the new capital structure, business plan and financial policy and reassess the ratings upon completion and implementation of any restructuring.
PARIS (S&P Global Ratings) --S&P Global Ratings today took the rating actions listed above. The downgrade follows Europcar's announcement that it has elected not to pay the interest due on its 2024 and 2026 corporate senior notes prior to the end of the 30-day grace period. The group has entered into a forbearance agreement with its bondholders, such that they will not take any enforcement action with respect to the nonpayment of interest payments on the 2026 notes that were due on Oct. 30, 2020, or on the 2024 notes that were due on Nov. 16, 2020. In addition, the lenders under the RCF and the French state-guaranteed loan (Pret garantis par l'Etat) have agreed to waive any default or event of default under their loans that would result directly or indirectly from these nonpayments. The unpaid coupons will be capitalized with the intention to include them in the restructuring negotiations.
We view the nonpayment of interest on the senior notes as a default because Europcar has breached a stated promise on a financial obligation, regardless of the forbearance. However, we understand that the company intends to continue to service its other rated debt instruments, including the EUR670 million corporate RCF and EUR500 million fleet bond. Europcar International S.A.S.U. is unaffected by the rating action, because the entity does not issue or guarantee any of the 2024 and 2026 senior notes.
On Nov. 25, Europcar entered into a lock-up agreement with a group of cross-party creditors to pursue its corporate debt restructuring. Key terms of the lock up agreement include:
oFull equitization of the principal amount plus accrued and unpaid interest of the EUR600 million senior notes due in November 2024, EUR450 million senior notes due in April 2026, and EUR50 million bilateral credit line due in December 2020.
oCapital increase of EUR250 million.
oNew revolving fleet financing of EUR225 million.
oRefinancing of the EUR670 million RCF through a new EUR170 million RCF and EUR500 million term loan facility.
Europcar Mobility Group intends to file for accelerated financial safeguard procedures, to be launched in mid-December 2020, subject to receipt of the relevant consents and waivers from creditors. The closing of the restructuring transaction is expected in March 2021, conditional on a number of requisite approvals.
Subject to ongoing developments of the group's restructuring plan, after any restructuring is complete, we would reassess the group's new proposed capital structure, business plan and financial policy and review the ratings.
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Related Research
oEuropcar Mobility Group Affirmed At 'CC' On Entering Grace Period; Outlook Negative, Nov. 3, 2020
oEuropcar Mobility Group Downgraded To 'CC' From 'CCC+' On Intent To Restructure Debt; Outlook Negative, Sept. 15, 2020
oEuropcar Downgraded To 'CCC+' From 'B-' On COVID-19 Disruption And Potential Liquidity Pressure; Outlook Negative, May 28, 2020
oEuropcar Mobility Group Downgraded To 'B-' From 'BB-' On COVID-19 Effects And Weakening Liquidity; On Watch Negative, April 3, 2020
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