ROTTERDAM, NETHERLANDS — Standard & Poor’s Ratings Services on Nov. 13 affirmed its “BBB-” long-term and “A-3” short-term issuer credit ratings on The Netherlands-based Louis Dreyfus Company (LDC).
The affirmation comes after LDC’s recent announcement to sell a 45% equity stake in the LDC unit to Abu Dhabi-based holding company ADQ, creating a new ownership structure.
“We believe this transaction will have financial benefits for LDC, including the repayment at closing of at least $800 million of debt raised to fund a loan to the parent company, and substantially lower likelihood of large extraordinary dividends compared with previous years,” S&P said.
According to S&P, LDC has recorded a strong operating performance for the 2020 year and it expects the company to have an EBITDA at the same level for 2021. S&P anticipates strong earnings for LDC next year based on the expansion of its oilseeds business and the execution of a fixed-cost savings plan.
S&P said the “positive outlook” indicates it could upgrade LDC over the next 12 to 24 months if it continues with an EBITDA of at least $1 billion, demonstrating a resilient business model in unfavorable market conditions.
“This rating reflects the positive long-term outlook for our sector, recognizes LDC’s solid track record of resilient results, and demonstrates confidence in the Group’s ambitious strategy for a new stage of growth and development,” said Patrick Treuer, chief financial officer of LDC. “Following the strategic partnership signed this week, LDC is well positioned to accelerate its long-term business plan through investments across the value chain, in order to fulfill its crucial role for global food security and create value for shareholders, while maintaining discipline and prudence in financial and risk management.”