Intrum AB upgraded to ’CCC+’ from ’D’ by S&P on debt restructuring

Investing.com -- S&P Global Ratings upgraded Intrum AB (ST:INTRUM) to ’CCC+’ from ’D’ on Thursday following the company’s debt restructuring, with a stable outlook.

The Swedish debt collection firm has improved its capital structure through a recapitalization that includes several key elements. The restructuring involved an internal reorganization with new subsidiaries between Intrum AB and its operating units, a 10% debt write-down of previous unsecured notes (approximately €3.4 billion) compensated by 10% new ordinary shares, and the remaining 90% unsecured notes exchanged for new senior secured notes with maturities spread from 2027 to 2030.

Additionally, Intrum will issue new money senior secured notes of €526 million to acquire new exchange notes at a discount over the next 12 months. The company has also amended its revolving credit facility, extending its maturity to June 2028 from January 2026 and reducing total commitments to €1.1 billion from €1.8 billion.

The restructuring has extended Intrum’s debt maturity profile and created a liquidity buffer for the coming quarters. However, S&P believes the company’s capital structure remains vulnerable over the medium term with financial leverage expected to remain high post-recapitalization, estimated at 6.5x-7.0x.

Under S&P’s base case, Intrum can gradually reduce leverage toward 6.25x-6.50x by year-end 2025 and 5.50x-5.75x by year-end 2026. The pace of deleveraging will depend on management’s investments in new portfolios, success of cost-cutting measures, and the industry environment.

Intrum faces significant refinancing risk in 2027, with the total refinancing amount dependent on the success of discounted buybacks using proceeds from the new money notes, which are also due in 2027.

The company’s future financial profile improvement depends on its investment strategy in new portfolios. Current investment levels below the Swedish krona (SEK) 2 billion per year target will allow Intrum to generate cash flow in the short term but may impact future revenue generation.

S&P noted that Intrum is making progress on its strategic plan, demonstrated by improved operating results and a 20% reduction in group costs in the first quarter of 2025. The stable outlook reflects the lack of material debt maturities in the coming 12 months.

S&P could lower the rating if Intrum fails to reduce its financial leverage, which would increase refinancing risk for 2027 maturities. An upgrade is unlikely over the next 12 months but could occur in the medium term if management succeeds in its strategic shift, allowing for significant deleveraging.

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