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Rating Action:

Moody's assigns B2 CFR to Comexposium's new parent company (Cassini SAS); outlook negative

25 Jan 2019

Madrid, January 25, 2019 -- Moody's Investors Service ("Moody's") has today assigned a B2 corporate family rating (CFR) and a B2-PD probability of default rating (PDR) to Cassini SAS (Cassini), the ultimate parent of Comexposium Holding ("Comexposium"), a France-based trade fair and exhibitions organiser. Cassini will become the new top company within the restricted group issuing consolidating financial statements for the Comexposium group. Concurrently, Moody's has assigned a B2 rating to the new EUR483 million senior secured Term Loan B due 2026 to be raised at Cassini (EUR190.4 million) and Comexposium (EUR292.6 million) levels and to the EUR90 million senior secured revolving credit facility (RCF) due 2025. The outlook on the ratings is negative.

At the same time, Moody's has withdrawn the B2 CFR and B2-PD PDR at Comete Holding, the previous top company within the restricted group. Moody's has affirmed the B2 rating on the existing EUR355 million TLB issued by Comete Holding. This debt instrument will be redeemed in due course with proceeds from the new debt issuance, and its rating will be withdrawn upon repayment.

Predica, a fully owned subsidiary of insurance company Crédit Agricole Assurances (CAA), part of the Crédit Agricole S.A. group (Aa3), intends to acquire Charterhouse Capital Partners' stake in the Comexposium group, whilst Paris Ile-de-France Regional Chamber of Commerce and Industry would maintain its historical ownership level.

The company is raising a new EUR483 million term loan to partially fund the acquisition by CAA and to refinance Comexposium's existing indebtedness. This represents an upsize of EUR128 million compared to the existing EUR355 million term loan B.

"Comexposium's B2 rating with a negative outlook reflects the company's high leverage post-transaction, as a result of which it will be weakly positioned in the current rating category with limited headroom to accommodate any operating underperformance or material debt funded acquisitions. We estimate that Comexposium's adjusted leverage will increase to around 7.3x in 2018 on a pro forma basis, from 5.8x in 2017," says Víctor García, Moody's lead analyst for Comexposium.

A full list of affected ratings can be found at the end of this press release.

RATINGS RATIONALE

-- RATIONALE FOR B2 CFR

Comexposium's B2 CFR with a negative outlook reflects the expected increase in Moody's-adjusted leverage post-transaction to 7.3x pro forma in 2018 compared to 5.8x in 2017.

Moody's estimates that the company will be able to reduce leverage to 6.6x in 2019 and 5.8x in 2020, supported by low single-digit revenue growth and stable profitability, with an EBITDA margin of around 25%.

While leverage post-transaction will be outside the leverage trigger for the current B2 CFR for the next 12-18 months, Moody's derives comfort from the company's strong free cash flow generation, good track record of operating performance, solid revenue and earnings visibility and its adequate liquidity profile.

The rating also factors in the more aggressive financial policy of the company post-transaction, as the new financing adds around EUR128 million of debt to the capital structure (i.e. approximately 1.4x of adjusted leverage). However, Moody's also qualitatively recognises the benefits associated to the fact that the company is partially owned by the Chamber of Commerce of Paris.

Comexposium has an adequate liquidity profile, supported by a fully undrawn EUR90 million revolving credit facility (RCF) and a cash balance of EUR48 million at closing of the transaction. This coupled with Moody's expectation of free cash flow generation of around EUR25 million in 2019 and 60 million in 2020, will allow the company to comfortably meet its cash requirements over the next 12-24 months.

The B2 CFR reflects: (1) the company's high leverage, (2) the inherent cyclicality in some of the company's targeted verticals, in particular the leisure and fashion sectors, (3) its lower EBITDA margins compared to other events exhibitions organisers, (4) its small scale relative to other peers in the business and consumer services industry, (5) revenue concentration in France and around its top ten events, (6) and Moody's expectations that the company will continue to pursue an active M&A strategy in a sector that is consolidating.

The ratings also reflects: (1) the company's good track record of operating performance, (2) its strong free cash flow generation, underpinned by an asset-light business model with structurally negative working capital and low capex requirements, (3) the resiliency of the business model as demonstrated in the last economic downturn, (4) relatively high barriers to entry in the industry, (5) and the company's good revenue and earnings visibility.

-- RATIONALE FOR B2 DEBT INSTRUMENT RATINGS

The ratings on the new EUR483 million senior secured term loan B due 2026 and the new EUR90 million senior secured revolving credit facility due 2025 are B2, in line with the CFR, reflecting the fact that they share the same security and guarantor package and that both instruments rank on a pari passu basis.

RATIONALE FOR NEGATIVE OUTLOOK

The negative outlook reflects the high leverage of the company and its limited headroom in the current rating category for any operating underperformance or debt funded acquisitions. It also factors in the more aggressive financial policy under the new owners.

WHAT COULD CHANGE THE RATINGS UP/DOWN

Positive ratings pressure could develop should Comexposium's leverage (Moody's adjusted gross debt / average EBITDA) sustainably decrease to below 4.75x. An upgrade would also require the company to successfully achieve organic mid-single digit revenue growth on an annualised basis.

Negative ratings pressure could develop should Comexposium's leverage (Moody's adjusted gross debt / average EBITDA) increase towards 6.0x as a result of softening in demand for the company's events or debt funded acquisitions. Downward pressure would also ensue should the company's liquidity profile deteriorate including a reduction in covenant headroom.

LIST OF AFFECTED RATINGS

Assignments:

..Issuer: Cassini SAS

.Corporate Family Rating, Assigned B2

.Probability of Default Rating, Assigned B2-PD

.BACKED Senior Secured Bank Credit Facility, Assigned B2 (LGD4)

Affirmation:

..Issuer: Comete Holding

. BACKED Senior Secured Bank Credit Facility, Affirm B2 (LGD4)

Withdrawals:

..Issuer: Comete Holding

.Corporate Family Rating, Withdrawn, previously B2

.Probability of Default Rating, Withdrawn, previously B2-PD

Outlook Actions:

..Issuer: Cassini SAS

.Outlook, Assigned Negative

..Issuer: Comete Holding

.Outlook, Changed to Negative from Stable

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

COMPANY PROFILE

Headquartered in Paris, Cassini SAS, the ultimate owner of Comexposium Holding, is a leading organiser of trade fairs and trade shows, with the largest market position in France and the third market position in exhibitions globally, in terms of revenue. The company owns and operates 135 B2B and B2C events across 11 main sectors, connecting more than 46,000 exhibitors and 3.5 million visitors every year in 30 countries. The company reported pro-forma revenue of €358 million and pro-forma EBITDA of €83 million in 2018, annualised for the effect of biennial and triennial events.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt 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.

With reference to the withdrawal of the ratings of Comete Holding: The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

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.

Victor Garcia, CFA
Analyst
Corporate Finance Group
Moody's Investors Service Espana, S.A.
Calle Principe de Vergara, 131, 6 Planta
Madrid 28002
Spain
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 Investors Service Espana, S.A.
Calle Principe de Vergara, 131, 6 Planta
Madrid 28002
Spain
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

No Related Data.
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