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Rating Action:

Moody’s assigns a B2 rating to Andromeda Investissements' debt add-on

15 January 2020

London , January 15, 2020 – Moody's Investors Service, ("Moody's") has assigned a B2 rating to Andromeda Investissements' (Andromeda) €65 million new senior secured term loan B4 tranche issuance. Andromeda's existing ratings, comprising of B2 corporate family rating, B2-PD probability of default rating, and B2 ratings on the company's existing senior secured facilities remain unaffected. In fact, despite the increase in debt amount, we expect the group's Debt/EBITDA ratio to remain between 5x and 6x over the next 12 months, which is consistent with B2 rated peers. The stable outlook remains unaffected.

RATINGS RATIONALE

The B2 CFR on Andromeda reflects APRIL SA's (APRIL) strong business profile and competitive position within the wholesale broking business in France, its solid profitability, and the resilience and predictability of its earnings. Andromeda's rating is constrained by its limited diversification outside the French market, and a weak financial profile resulting from the leveraged buy-out.

The debt add-on will fund the acquisition of the shares in insurance broker APRIL that Andromeda does not already own. The planned debt add-on of €65 million, which is within Moody's assumption, will increase the group's total reported borrowings to EUR 564.5 million (EUR 499.5 million as of September 2019), but will maintain its leverage within Moody's expectations.

Following the acquisition of Evolem's 65.6% equity stake in April 2019, Andromeda launched a tender offer to buy out minority shareholders and increased its ownership stake to 88.9% in August 2019. As of 30 December 2019, Andromeda had secured an additional 10.18% of APRIL's share capital, bringing its total ownership to 99.01%. Andromeda has confirmed its intention to file a buy-out offer followed by a squeeze-out to acquire the outstanding shares in APRIL.

Andromeda will achieve full ownership of APRIL in the course of 2020. As a result, all facilities (term loans and revolving credit facility (RCF)) will rank pari passu and will be secured by substantially all the assets of APRIL. The B2 rating on the group's term loan facilities is in line with that of the RCF. According to the term of the credit documentation, given that the full ownership of APRIL is secured, the RCF can now be drawn.

OUTLOOK

The rating outlook for Andromeda is stable, reflecting Moody's expectation that APRIL will maintain solid profitability and will maintain financial leverage below 6x while growing EBITDA over the next 12 to 18 months.

WHAT COULD DRIVE THE RATING UP / DOWN

Factors that could lead to an upgrade of the CFR include:

- Adjusted Debt-to-EBITDA ratio below 5x

- (EBITDA-Capex) coverage of interest exceeding 3x

- EBITDA margin increasing to above 25%

Factors that could lead to a downgrade of the CFR include:

- Adjusted EBITDA increasing above 6x

- FCF/Debt falling below 3%

- (EBITDA-Capex) coverage of interest falling below 1.5 x

The principal methodology used in this rating was Insurance Brokers and Service Companies published in June 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

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.

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.

Marina Cremonese
VP-Senior Analyst
Financial Institutions Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London
United Kingdom
JOURNALISTS : 44 20 7772 5456
Client Service : 44 20 7772 5454

Antonello Aquino
Associate Managing Director
Financial Institutions Group
JOURNALISTS : 44 20 7772 5456
Client Service : 44 20 7772 5454

Releasing Office :
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London, E14 5FA
United Kingdom
JOURNALISTS : 44 20 7772 5456
Client Service : 44 20 7772 5454

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