Mavis term loan rating affirmed by Fitch after upsized $1.2 billion financing

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Mavis term loan rating affirmed

Highlights

Fitch affirmed Mavis Tire Express Services' 'B-' IDR and 'B'/'RR3' rating on $1,185 million secured term loan after upsizing by $410 million, maintaining Stable Outlook.
Expanded credit supports redemption of preferred equity and revolver repayment, leaving pro forma liquidity at $878 million, including $83 million year-end 2025 cash and $795 million revolver capacity.
Ongoing rapid expansion—including the Midas acquisition and aggressive store openings—drives projected 2026 EBITDA to $750 million but keeps free cash flow negative and leverage in the high-6x EBITDAR range.

Fitch affirms ratings after loan increase

As reported by Fitch Ratings, Mavis Tire Express Services TopCo, Corp. and Metis HoldCo, Inc. keep their Long-Term Issuer Default Rating at 'B-' after the company increased its new secured term loan by $410 million to $1,185 million. Fitch also affirms Mavis' revolver and first lien term loans at 'B'/'RR3' and its senior unsecured notes at 'CCC'/'RR6', saying proceeds from the new term loans are expected to redeem preferred equity and repay revolver borrowings.

Fitch says the larger loan is leverage neutral and maintains a Stable Outlook. The agency's assessment reflects Mavis' standing as a major tire and automotive services retailer in the U.S. non-discretionary market, supported by more than 18 years of positive same-store sales growth and projected EBITDA of $750 million in 2026.

At the same time, Fitch points to high-6x EBITDAR leverage in 2026, low fixed-charge coverage in the mid-to-high 1x range, and negative free cash flow as the company continues to spend heavily on expansion. Liquidity remains adequate, with pro forma liquidity of $878 million, including $83 million in cash at year-end 2025 and $795 million of available revolver capacity.

Expansion plan drives growth and credit risk

Fitch expects Mavis to continue growing through greenfield openings, brownfield sites and acquisitions, with management targeting more than 120 new stores in 2026 and more than 160 a year from 2027 through 2030. Since its 2021 leveraged buyout, the company has expanded to 3,619 locations from 1,190, helped by acquisitions including TBC in 2023 and Midas in 2025.

The Midas transaction adds about 1,200 franchise locations and an asset-light royalty stream, while 111 stores are converted to company-operated sites. Fitch says EBITDA rises to about $750 million in 2026 from $633 million in 2025, with EBITDAR margins improving by 100 to 200 basis points as acquired stores mature, integration synergies build and MavOS is rolled out across more than 1,600 company-operated stores by the end of 2026.

Even so, Fitch says the capital-intensive strategy keeps free cash flow negative in the near to intermediate term, with new stores producing negative EBITDA during their ramp-up period and large deals likely to rely on additional debt and sale-leaseback funding. The agency expects leverage to ease only gradually toward the mid-6x range by 2029, mainly through EBITDA growth rather than debt repayment, while noting that Mavis benefits from resilient maintenance demand, a fragmented market and scale advantages in procurement, marketing and site selection.

Our earlier coverage of Fitch’s affirmation of Ocado Group PLC at 'B-' with a Stable Outlook explained that the rating remained constrained by negative free cash flow and execution risk tied to its revised fulfilment strategy. We noted Fitch’s expectation of softer FY26 EBITDA after multiple customer fulfilment centre closures, partly offset by cost savings and closure-related compensation that supports liquidity and helps manage the group’s 2027 debt maturity.

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