S&P Global has assigned theme park operator Parques Reunidos a non-investment grade B- rating following its acquisition by EQT Infrastructure, noting the combination of high financial leverage with weather and terrorism risks.
EQT Infrastructure last week announced it had secured the acquisition of Madrid-listed Parques Reunidos, which has more than 60 theme, water and animal parks as well as other attractions in Europe, North America and Australia, after making an offer earlier this year.
Rating agency S&P noted that EQT and its consortium partners are funding the EUR 2bn acquisition of the company with a EUR 960m term loan and a EUR 200m revolving credit facility, resulting in adjusted debt of around 6.6x 2019 EBITDA.
This is high given that Parques Reunidos is “fairly seasonal” and exposed to event risks, S&P said in a rating report released today (17 September).
“Parques Reunidos has underperformed since its IPO in 2016 as it faced exceptional events such as adverse weather and terrorist attacks,” S&P noted.
Parques Reunidos’ 2016 financial results were hit by the impact of a terrorist attack in Nice, France on its nearby Marineland water park.
However, S&P has a positive outlook on the rating, which it assigned to Piolin Bidco S.A.U, the vehicle that has acquired Parques Reunidos, it said. It noted that it expects Parques Reunidos to successfully execute a turnaround strategy involving digitalisation and marketing.
Following the acquisition it will own 53.13% of the company, while investment companies Corporación Financiera Alba will own 24.4% and Groupe Bruxelles Lambert will own 22.47%.
EQT said in the acquisition announcement that Parques Reunidos, which is Europe’s second biggest recreational infrastructure operator, “displays strong operational infrastructure characteristics.”