Fitch Ratings - 30 October4 Nov 2025 10:51
Fitch Ratings has maintained Victoria PLC's ratings on Rating Watch Negative (RWN). A summary of rating actions is provided below.
The action follows Victoria's withdrawal of the tender offer to exchange its 2028 senior secured notes (SSNs) and reflects our expectation that another refinancing proposal is likely in the short term, which could constitute a distressed debt exchange (DDE) under our criteria.
The RWN further reflects Victoria's moderate liquidity, high leverage, and projected negative free cash flow (FCF) over FY26-FY29 (year-end March). We expect to resolve the RWN once the company has announced its refinancing proposal. Key Rating Drivers:
Continued Refinancing Uncertainty: Fitch views Victoria's withdrawal of the tender offer to exchange its 2028 SSNs for second-priority notes (SPNs) as underscoring its limited refinancing options and heightening the uncertainty around the company's future capital structure. We expect a further proposal to refinance the 2028 notes in the short term, to mitigate the risk associated with the springing maturity clause in the first-priority notes (FPNs). Fitch continues to expect any potential transaction to be treated as a DDE under its criteria, given the likelihood of materially reduced terms for existing creditors.
Fitch forecasts continued demand weakness to drive a revenue decline in FY26, followed by a modest recovery with 2.6% growth in FY27. We expect liquidity to remain moderate, with increased use of Victoria's revolving credit facility (RCF) to fund negative FCF and one-off restructuring costs.
Limited Financial Flexibility: Fitch forecasts Victoria to generate negative FCF across FY26-FY29, driven by insufficient EBITDA to fund its higher interest costs and forecast annual capex plan. We expect leverage to stay above the sector's 'CCC' midpoint (7.0x) through FY26-FY29 with financial flexibility constrained amid heightened refinancing risk.
High Leverage: Fitch forecasts Victoria's leverage to increase to a high 13.0x at FYE26, before falling to 8.0x by FYE29. The initial increase reflects higher debt after its debt restructuring in September 2025, alongside our assumption that its preferred equity would be refinanced with debt in FY26 to avoid triggering the change-of-control clause within the bond documentation, which could arise if the preference equity is converted into equity. Further, continued underperformance in EBITDA remains a risk until its meaningful recovery, which we expect only from FY27-FY28. This implies leverage will sharply increase in FY26-FY27.
Senior unsecured debt consists of overdraft facilities and other bank loans, which rank behind senior secured debt.
New FPNs issued in September 2025 (2029 maturities) of GBP576 million (GBP528 million plus payment-in kind component of coupon for next 12 months) rank after the RCF. SSNs of GBP8 million maturing in 2031 and GBP143 million maturing in 2028 rank next in the security waterfall after the new FPN.
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