S&P rating comes as it is said to meet banks to discuss refinancing plan worth $1.65bn
UAE-based GEMS Education has been granted a preliminary “B” rating by S&P Global Ratings, with a strong outlook bolstered by increasing capacity and its focus on affordable pricing, S&P has announced.
In a statement, S&P noted that GEMS has Earnings before interest, tax, depreciation and amortization (EBITDA) margins of about 30 to 35 percent and good cash flow visibility.
S&P’s outlook for the company reflects its view that GEMS will maintain its strong market position in the UAE’s education sector, with EBIDTA margins likely to remain the same, supported by increasing capacity utilisation and a growth in support services.
Additionally, S&P said that the company’s focus on the affordable pricing segment and scale in Dubai’s K-12 market is likely to support stable earnings and cash flow generation in the future.
On Sunday, Reuters reported that GEMS is meeting banks in London and New York to discuss refinancing worth $1.65 billion.
Last week, GEMS said that a consortium led by CVC Capital Partners has agreed to acquire a 30 percent stake in the company. The company also said that that it launched a refinancing plan that will include loans and bonds, although it did not give further details.
According to LPC – a fixed income news service that forms part of Refinitiv – the refinancing includes an $850 million loan, of which $500 million is in secured bonds and $300 million worth of euro-denominated bonds.
The LPC report added that Goldman Sachs and Credit Suisse are the global coordinators for the financing, while Citi and HSBC are bookrunners. No source for the information was given.
Arabian Business has reached out to GEMS for comment.
The GEMS statement last seek said that the CVC Consortium deal will allow it to take on 14 additional private schools in Europe through the acquisition of UK-based Bellevue Education. It will also allow the exit of a consortium led by Fajr Capital Ltd, which includes Tactical Opportunities funds managed by Bahain’s Mumtakalat Holding Co. and Blackstone Group.
Khazanah Nasional Berhad, Malaysia’s sovereign wealth fund will retain a 3 percent stake.
The Varkey family will remain GEMS’ largest shareholder.