Grifols plummets 12% on the stock market after warnings from Fitch and Moody’s

The stock falls below 8 euros for the first time since March

June 27 () –

This Thursday, Grifols shares led the declines in the Ibex 35 by collapsing by 12.22%, reaching its unit price at 7.97 euros, after the latest updates of the Catalan company’s rating carried out by the agencies. Moody’s and Fitch credit rating.

Thus, the blood products company has erased the partial recovery that it had been building on the stock market in the spring months and has closed with its share price below 8 euros for the first time since March.

With Thursday’s results, the company has accumulated a stock market depreciation of 48% so far this year, while capitalization has stood at 4.685 billion euros, far from the almost 10 billion with which it said goodbye to 2023.

Aside from the warnings from Moody’s and Fitch, according to ‘El Confidencial’, CaixaBank, BBVA and Sabadell have refused to refinance their part of the 400 million euro loan of debt with immediate maturity from Scranton Entreprises BV, the Dutch company through which the family strengthens its control of the capital of the Catalan multinational. Market sources consulted by Europa Press have indicated that the Dutch firm is in talks with the banks about this loan.

Regarding Grifols’ rating, Fitch Ratings has revised the outlook for the Catalan firm’s long-term credit rating from negative to stable, confirming it at ‘B+’, while Moody’s lowered it yesterday to ‘B3’ from ‘B2’.

On the other hand, CaixaBank, BBVA and Sabadell have refused to refinance their part of the credit of 400 million euros of debt with immediate maturity from Grifols’ family office, Scranton, according to information reported this morning by ‘El Confidencial’.

Specifically, he referred to the fact that CaixaBank, the main creditor, with almost 70 million lent, “has opposed extending the Grifols’ liabilities until 2029”, given that the entity led by Gonzalo Gortázar “has not accepted the proposal of the businessmen, who had requested to extend the 400 million loan for five years with full amortization at the end of it, that is, with the ‘bullet’ type modality”.

BBVA and Banco Sabadell, which granted the company 20 and 40 million euros in each case, have also not accepted, according to the same sources.

However, some international entities were in favor of extending the maturity of this debt, but the refusal of CaixaBank and Banco Sabadell, and “BBVA’s doubts have made renewal impossible.”

In total, CaixaBank, Banco Sabadell and BBVA total 130 million on a global loan of 400 million, in which entities such as HSBC, Commerzbank, BNP and DNB Sweden also participated, with another 40 million each, plus the German Helaba –27 million–, Bank of America –12 million– and Banco Pichincha –6 million–.

However, the final maturity date of the 400 million is next July 17, “but the family and the rest of the Scranton partners had to make a very relevant amortization this coming Friday.”

“The Grifols have urgently requested an extension or ‘waiver’ of four months to prevent the loan from being declared unpaid and the bank executing the guarantees. The granting of this agreement must be authorized by the creditors unanimously,” details ‘ The confidential’.

FITCH FORECASTS A “GRADUAL” INCREASE IN EBITDA

The outlook revision reflects Fitch’s view that the short-term refinancing risk has been “significantly” reduced following the issuance of €1.3 billion of senior secured bonds and the sale of the majority of Grifols’ stake in Shanghai RAAS (SRAAS) for €1.6 billion, “which will allow it to meet its significant debt maturities in the first half of 2025.”

“We note that the company has yet to extend its revolving credit facility (RCF) due in November 2025, but we expect it to do so before the end of 2024,” Fitch said.

The agency adds that Grifols’ ratings are limited “by its high leverage, tight liquidity and temporarily subdued free cash flow (FCF).”

All in all, Fitch has advanced that it foresees a “gradual” increase in the gross operating profit (Ebitda) over the next four years, driven by sales growth, the reduction in the costs of obtaining plasma and the launch of products from Biotest.

MOODY’S REDUCED TO ‘B3’

Moody’s announced on Wednesday at the close of trading that it had downgraded the Catalan firm’s rating to ‘B3’ from ‘B2’ due to the company’s leverage levels and its governance model, thus ending the review initiated on March 5 due to lower cash generation and the delay in the publication of its audited accounts.

The agency explained that the downgrade to B3 reflects Grifols’ high leverage – even despite the expected debt reduction from its recent asset sale – as well as the slower-than-expected recovery of free cash flow, which will result in credit metrics that will be in line with a B3 rating in the next 12 to 18 months.

Likewise, Moody’s has argued that governance considerations have also been a key factor in the downgrade: “In particular, limited forecasting of financial performance, the company’s risk management, a history of poor performance, a complex and opaque organizational structure involving transactions with related parties [en referencia a la relación de Grifols con Scranton, Haema y BPC]as well as management rotation.”

“We acknowledge that Grifols has made some positive changes to its governance, including the recent separation of management from shareholders and the appointment of a new CEO; however, there is currently a limited track record of the company’s operations following these changes,” Moody’s said.

For its part, the agency has also recognized the steps taken by the Catalan blood products company to address the maturities of its bonds maturing in the first half of 2025 and improve its liquidity position.

In that regard, it has cited that it raised €1.3 billion in privately placed senior secured notes and used the proceeds to repay its €1 billion in senior unsecured notes due in May 2025.

Grifols has also completed the sale of a 20% stake in Shanghai RAAS (SRAAS) and expects to use the related proceeds (€1.6 billion) to reduce its senior secured debt.

Despite this, Moody’s has concluded that Grifols’ liquidity is fragile, although adequate for the next twelve months; beyond that, they have observed that maintaining adequate liquidity will depend on Grifols returning to positive free cash flow generation.

Fitch Ratings has revised the outlook for Grifols’ long-term credit rating from negative to stable and confirmed the rating at ‘B+’.