Grifols shares fell more than 12% after Moody’s downgraded its solvency rating.

Grifols shares fell more than 12% after Moody’s downgraded its solvency rating.David Zorracino

Decrease in solvency rating Grifols To Moody Investors didn’t like this. Shares of the Catalan multinational blood products company fell by more than 12% this Thursday to 7.97 euros. This all comes after ratings agency Moody’s decided on Wednesday to downgrade the company’s corporate family rating (CFR). to “B3” from “B2”, forecast “stable”. In its statement, the firm assured that this action “ends the review of the reduction that began on March 5, 2024.”

And this contrasts with another agency’s report, Fitchwhich on the same day changed the outlook on Grifols’ rating from negative to stable and affirmed the “B+” rating, albeit with warnings about future developments. In turn, creditor banks blocked the refinancing of Scranton, the company in which the Grifols family is involved, although sources in the sector assure that “negotiations to find a solution are ongoing.”

The company, which held a general meeting two weeks ago, received support of the majority of shareholders in its strategy to counter the attacks promoted since January last year by the bear fund Gotham City.

Grifols placed another 300 million bonds at 7.5% to restructure debt

Moody’s downgrade ‘reflects still high levels of leverage’ Grifols, even with expected debt reduction from recent asset sales and a slower-than-expected free cash flow (FCF) recovery, will result in credit metrics more in line with the ‘B3’ rating over the next 12 to 18 months.” . The company closed last week. sale of 20% of Chinese subsidiary Shanghai Raas to Haier by about 1,600 million. He also restructured the debt repayment terms.

“Management considerations were also a key factor in today’s actions, particularly the limited predictability of the company’s financial performance and risk management, history of poor results, its complex and opaque organizational structure and its related party transactions, and management rotation. “, he explains.

Moody’s expects the company to use the proceeds from the sale of its 20% stake in Shanghai RAAS “to reduce existing senior secured debt on a pro rata basis, including the repayment of approximately €520 million of the outstanding €838 million in senior secured notes.” “Maturity in February 2025.”

Glanzmann (Grifols) calls attacks on the company “baseless” and “patently false.”

However, Moody’s believes the pharmaceutical company’s liquidity is still “fragile” and notes that “while it is adequate over the next 12 months, maintaining adequate liquidity going forward will depend on Grifols returning to positive free cash flow generation, which has not yet materialized.” “The company must also respond in a timely manner to the expiration of the RCF $1 billion debt in November 2025“, Add.

However, the agency clarifies that the Grifols rating “also takes into account good market position and vertical integration of the company in the field of products derived from human blood plasmaHe also explains that the “stable” outlook reflects his expectation “that Grifols’ results and cash flow will continue to recover gradually over the next 12 to 18 months, resulting in leverage reduction to levels that will allow it to be comfortably positioned at ‘B3’ and make free cash flow positive.