Paprec rating affirmed at BB after CEE acquisition push

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Paprec rating affirmed after CEE deal

Highlights

Fitch affirms Paprec Holding SA’s Long-Term Issuer Default Rating at 'BB' with Stable Outlook after announcing acquisitions of Marius Pedersen and Brantner in CEE.
Paprec's international operations are expected to account for 24% of pro-forma EBITDA by 2026, versus almost zero in 2020, with a revised credit ratio sensitivity range of 3.5x-4.2x.
The Marius Pedersen deal adds EUR700 million of debt and is expected to close by Q2 2027, while Fitch forecasts EBITDA net leverage peaking at 4.2x in December 2027 before gradual deleveraging.

CEE deals reshape rating profile

As reported by Fitch Ratings, Paprec Holding SA's Long-Term Issuer Default Rating remains at 'BB' with a Stable Outlook, while its outstanding senior secured notes stay at 'BB+' with a 'RR3' Recovery Rating. The rating action follows the company's announced acquisition of Marius Pedersen's central and eastern European activities, which Fitch says strengthens Paprec's business profile through greater scale, wider geographic reach and a slightly improved business mix.

Fitch says Paprec's 2026 acquisition pipeline reduces its concentration in France, with international operations likely to account for 24% of pro-forma EBITDA, versus almost no contribution in 2020. The agency also revises its debt-capacity sensitivities for the 'BB' rating to 3.5x-4.2x from 3.9x-3.9x, reflecting increased scale and stronger diversification across markets and services.

The planned purchase of Marius Pedersen's Czech and Slovak waste-management operations is expected to close by the second quarter of 2027, subject to antitrust approvals, and to add about EUR700 million of debt. Fitch says those businesses hold leading market positions and generated around EUR120 million of EBITDA in 2025, with a 32% margin. It also points to Paprec's August 2026 agreement to acquire Brantner, another CEE waste-management company, which generated about EUR34 million of EBITDA in 2025, calling the two transactions complementary for building a regional platform.

Deleveraging path remains narrow

Fitch expects EBITDA net leverage to reach 4.2x by December 2027, broadly in line with its pro-forma estimate for 2026 and up from 3.3x in December 2025. It then forecasts gradual deleveraging to 3.9x by 2029 as EBITDA growth partly offsets continued capital expenditure, rising dividends and moderate acquisition spending.

The agency expects Paprec to maintain annual capex at around 10% of sales to support domestic consolidation, international expansion and upkeep of its asset base. Fitch says management still has flexibility to trim spending if growth underperforms because a meaningful share of development capex is discretionary.

Fitch adds that a prudent financial policy is essential to preserving the 'BB' rating and says it takes into account management's public commitment to slow acquisitive growth and focus on deleveraging over the next two years. In its rating case, the agency assumes limited acquisitions totaling EUR200 million over 2027-2029, warning that any larger deviation would likely require remedial steps such as lower dividend distributions.

While Fitch sees higher integration risk from the size of the announced deals and Paprec's exposure to differing regulatory and operating frameworks, it says management's record of integrating smaller and mid-sized acquisitions partly mitigates execution risk. The agency also says refinancing risk remains limited because Paprec's debt maturity profile is well balanced, with EUR1.53 billion of its EUR1.95 billion outstanding senior secured notes maturing in 2030 and later, alongside a EUR700 million acquisition facility for the Marius Pedersen transaction.

Mall of Berlin lenders are sounding out investor demand for a potential sale of roughly €550 million of debt, while the owners pursue a refinancing in parallel to stabilize the asset’s balance sheet. Our earlier coverage explained how this dual-track approach gives creditors flexibility to test pricing across the capital structure amid pressure on German retail real estate financing.

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