The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

Rating action

Scope Ratings GmbH (Scope) has today placed the BB issuer rating of B+N Referencia Zrt. (B+N) under review for a developing outcome. Scope has also placed the BB senior unsecured debt rating under review for a developing outcome.

The issuer rating is placed on review for a developing outcome following B+N’s announcement of the acquisition of the KÖBERL Group which is expected to close in Q1 2025¹. The majority of the purchase price will be financed with debt. The increase in debt could result in the deterioration of credit metrics, but the effect is expected to be partially offset by the additional revenues and operating profitability of the acquired business. At the same time, the issuer's business risk profile is expected to improve in terms of diversification, which has historically been a significant weakness of B+N. Additionally, B+N has identified further targets in CEE and plans to continue its active M&A strategy in H1 2025 which may put further pressure on leverage.

The full list of rating actions and rated entities is at the end of this rating action release.

Under review for a developing outcome

Scope has placed all ratings under review for a developing outcome and will closely follow developments on the transaction.

The ratings could be affirmed if the transaction is completed with an overall credit-neutral rating impact or if it is cancelled.

Scope could upgrade the issuer rating by one notch if the transaction results in an improved business risk profile due to lower customer concentration as exemplified by less exposure to Hungarian state procurements, while maintaining a stable level of profitability and a leverage ratio (Debt/EBITDA*) that remains at or below 2.5x on a sustained basis.

Scope could downgrade the issuer rating by one notch if the acquisition were to result in a Debt/EBITDA ratio of more than 2.5x on a sustained basis, which could be the result of materialised execution risk as exemplified by a prolonged period of weaker profitability post-closing and higher-than-expected integration costs.

Debt rating

Following the rating action on the issuer rating, Scope also placed the BB senior unsecured debt rating under review for developing outcome. The newly contracted debt is likely to be senior secured, which could lead to the deterioration in the recovery of the existing debt.

Environmental, social and governance (ESG) factors

Scope emphasises the risks related to several concerns – including key person risk and limited transparency on B+N’s reporting, dividend policy and financial policy, as exemplified by previous dividends categorised as other expenses – however does not apply any negative rating-adjustment as these are already reflected in the assessment of the supplementary rating drivers.

All rating actions and rated entities

B+N Referencia Zrt.

Issuer rating: BB/under review for developing outcome, under review placement

Senior unsecured debt rating: BB/under review for developing outcome, under review placement

*All credit metrics refer to Scope-adjusted figures.
 
Rating driver references 
1. 18 December 2024 B+N press release

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodologies used for these Credit Ratings, (General Corporate Rating Methodology, 16 October 2023; European Business and Consumer Services Rating Methodology, 15 January 2024), are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.

Solicitation, key sources and quality of information
The Credit Ratings were not requested by the Rated Entity or its Related Third Parties. The Credit Rating process was conducted:
With the Rated Entity or Related Third Party participation     YES
With access to internal documents                                        YES
With access to management                                                 YES
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and the principal grounds on which the Credit Ratings are based. Following that review, the Credit Ratings were not amended before being issued.

Regulatory disclosures
These Credit Ratings are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings are UK-endorsed.
Lead analyst: Vivianne Anna Kápolnai, Senior Analyst
Person responsible for approval of the Credit Ratings: Sebastian Zank, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 4 October 2019. The Credit Ratings/Outlook were last updated on 17 January 2024.

Potential conflicts
See www.scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use/exclusion of liability
© 2024 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, Scope Innovation Lab GmbH and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5 D-10785 Berlin.