U.S. markets closed
  • S&P 500

    3,790.93
    +112.50 (+3.06%)
     
  • Dow 30

    30,316.32
    +825.43 (+2.80%)
     
  • Nasdaq

    11,176.41
    +360.97 (+3.34%)
     
  • Russell 2000

    1,775.77
    +66.90 (+3.91%)
     
  • Crude Oil

    86.37
    +2.74 (+3.28%)
     
  • Gold

    1,734.70
    +32.70 (+1.92%)
     
  • Silver

    21.12
    +0.53 (+2.58%)
     
  • EUR/USD

    0.9987
    +0.0160 (+1.6279%)
     
  • 10-Yr Bond

    3.6170
    -0.0340 (-0.93%)
     
  • Vix

    29.07
    -1.03 (-3.42%)
     
  • GBP/USD

    1.1474
    +0.0155 (+1.3666%)
     
  • USD/JPY

    144.1020
    -0.5180 (-0.3582%)
     
  • BTC-USD

    20,351.64
    +788.04 (+4.03%)
     
  • CMC Crypto 200

    460.91
    +15.47 (+3.47%)
     
  • FTSE 100

    7,086.46
    +177.70 (+2.57%)
     
  • Nikkei 225

    26,992.21
    +776.42 (+2.96%)
     

Placin S.á.r.l. -- Moody's changes outlook on Planasa's B2 ratings to stable from negative

·18 min read

Rating Action: Moody's changes outlook on Planasa's B2 ratings to stable from negativeGlobal Credit Research - 10 Feb 2022Milan, February 10, 2022 -- Moody's Investors Service ("Moody's") has today changed to stable from negative the outlook on the ratings of Placin S.á.r.l. ("Planasa" or "the company"), the owner of Planasa, a leading berry breeding and nursery company, domiciled in Spain. Concurrently, Moody's has affirmed Planasa's B2 corporate family rating (CFR), its B2-PD probability of default rating (PDR) and the B2 ratings on the E220 million backed senior secured term loan B due 2025 (including the E25 million fungible add-on) and the E40 million backed senior secured revolving credit facility (RCF) due 2024 borrowed by Planasa."The outlook change to stable reflects the improvement in the company's underlying profitability and cash generation as well our expectation that its leverage will decline towards 5x over the next 12 months," says Valentino Balletta, Moody's lead analyst for Planasa."The company has returned to the growth trajectory that was temporarily disrupted by the coronavirus pandemic," adds Mr Balletta.A full list of affected ratings is provided towards the end of the press release.RATINGS RATIONALEThe outlook change to stable from negative reflects the improvement in Planasa's operating performance over the course of fiscal year 2022, owing to strong demand for its products and to the company's efforts to focus on high margin business lines such as breeding.Planasa's business proved to be fairly resilient to the coronavirus pandemic, facing a relatively limited disruption in the financial year ended in March 2021, with only a 2% revenue decline and a 4% decline in Moody's-adjusted EBITDA. In 2021, the company had limited order cancellations and it did not face any major headcount availability problems. The company estimates that the direct negative impact from additional costs linked to the pandemic on its EBITDA was limited, at around E2 million. More negatively, phytosanitary issues in its Mexican strawberry nursery business resulted in a E5 million EBITDA loss. As a result, Planasa's Moody's-adjusted leverage reached 6.3x in March 2021.In 2022, Planasa topline and earnings grew by double digits, leading to better credit metrics. Topline growth has been supported by pent-up demand, as some of the customers postponed purchasing decisions during the pandemic, and further growth of the company's newly introduced plant varieties, especially blueberries, blackberries and avocado. In addition, earnings growth has been supported by the divestments and closures of loss-making activities in the fresh produce segment, lower one-off costs, as well as the business reorganization toward more margin-accretive activities, such as breeding, which benefit from royalty payments from farmers.Moody's expects Planasa's profitability to continue to improve over the next 12 to 18 months, supported by mid-to-high single digit revenue growth and further improvement in earnings allowing it to continue to generate positive free cash flow and to reduce its financial leverage towards 5.0x.In July 2021, Planasa acquired a Dutch raspberry breeding company called Advanced Berry Breeding for a total enterprise value of around E17 million. The acquisition was entirely financed with a E25 million fungible add-on to Planasa's existing backed senior secured term loan B, with no equity contribution from the private equity sponsor. The acquisition increased Planasa's net leverage by around 0.2x.Moody's believes that the company is likely to pursue further bolt-on acquisitions to complement and reinforce its strategy. The rating agency expects the company to maintain a prudent approach toward acquisitions, such that any potential future transactions will not lead to a significant increase in its leverage on a pro forma basis, although such strategy creates additional risks to Planasa's deleveraging trajectory.Planasa's B2 CFR continues to factor in (1) the company's high profitability, underpinned by its strong position in the upstream segment of the value chain; (2) its extensive expertise and know-how in the nursery business and R&D capabilities in the breeding business; (3) its presence in key geographies and high-growth markets; and (4) the supportive medium-term demand dynamics in the berries market.However, the company's rating is constrained by (1) Planasa's small scale of operations, reflecting its niche business profile; (2) its high product concentration and a degree of geographic concentration; (3) its high seasonal business and exposure to weather conditions, plant diseases and quality issues, which can significantly affect its earnings; (4) its currently high leverage, though expected to decline, and appetite for acquisitions, which entails a potentially slower deleveraging profile.LIQUIDITYPlanasa has good liquidity, supported by around E34 million cash on balance sheet as of December 2021. Additionally, the company has access to a E40 million backed senior secured revolving credit facility (RCF) due in 2024. The RCF is expected to be undrawn, with ample headroom under the springing covenant of net leverage not exceeding 8.0x, tested when the facility is more than 35% drawn.Planasa's cash generation is affected by the high seasonality of its business, with around three quarters of annual EBITDA generated between June and October, partly counterbalanced by the seasonality of net working capital.Moody's expects the company's funds from operations of around E35-40 million per year (after around E12 million annual interest payments), along with its cash holdings, to comfortably cover its net working capital seasonality (with over E20 million net working capital swings within the year) and its capital spending, which will peak at around E22 million in financial year 2022 (including capitalized R&D costs) and decline towards E15 million per year thereafter. Therefore, Moody's expects Planasa to generate positive Moody's-adjusted FCF of around E6 million in financial year 2022 and more than E15 million per year thereafter.Assuming no RCF utilisation, Planasa will have no any material debt maturities until January 2025, when its E220 million backed senior secured term loan B is due.RATIONALE FOR STABLE OUTLOOKThe stable outlook reflects Moody's view that Planasa's credit metrics will remain at levels commensurate with the B2 rating, with Moody's-adjusted gross debt/EBITDA moderately declining towards 5x in the next 12-18 months, while the company will continue to generate positive FCF on a sustained basis.The stable outlook also factors in Moody's expectation that the company will maintain a prudent approach to acquisitions, so that any potential future transactions will not lead to a material increase in leverage on a pro forma basis.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSUpward pressure on Planasa's ratings is currently limited, given the company's small size and niche business profile. A potential upgrade would depend upon the company's ability to increasing its scale and diversification.Quantitatively, positive rating pressure could develop if the company successfully executes its expansion strategy such that earnings growth leads to its Moody's-adjusted gross debt/EBITDA remaining below 4.0x on a sustainable basis, while it continues to generate positive free cash flow.Downward rating pressure could emerge if the company's operating and financial performance deteriorate from the current level, so that its Moody's-adjusted gross debt/EBITDA remains above 5.5x on a sustained basis or free cash flow turns negative, leading to a material deterioration in its liquidity. Significant debt-funded acquisitions could also result in downward pressure on the rating.PRINCIPAL METHODOLOGYThe principal methodology used in these ratings was Protein and Agriculture published in November 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1296919. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology. LIST OF AFFECTED RATINGS Affirmations: ..Issuer: Placin S.á.r.l. .... Probability of Default Rating, Affirmed B2-PD.... LT Corporate Family Rating (Local Currency), Affirmed B2....BACKED Senior Secured Bank Credit Facility, Affirmed B2Outlook Actions:..Issuer: Placin S.á.r.l.....Outlook, Changed To Stable From NegativeCOMPANY PROFILEHeadquartered in Navarra, Spain, Planasa is an international operator in the berries market with a presence in 14 countries. The company's main activities are the breeding and nursery of berries, mainly strawberry and raspberry, with a growing contribution of blueberry and blackberry, and the sale of seeds and plants to berry growers. Planasa's activities also include selling fresh produce to end-customers.In the financial year 2021, Planasa generated revenue of E155 million and Moody's-adjusted EBITDA of E35 million. Planasa is majority owned by funds advised by private equity sponsor Cinven, which acquired a 65% stake in the company in October 2017. The former CEO and owner of the company, Alexandre Darbonne, holds the remaining non-controlling share in Planasa's equity.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Valentino Balletta Analyst Corporate Finance Group Moody's Italia S.r.l Corso di Porta Romana 68 Milan 20122 Italy JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Ivan Palacios Associate Managing Director Corporate Finance Group JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Releasing Office: Moody's Italia S.r.l Corso di Porta Romana 68 Milan 20122 Italy JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 © 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY100,000 to approximately JPY550,000,000.MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements. ​