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Dubai, United Arab Emirates - 14 July 2019: GEMS MENASA (GEMS) is the largest K-12 schools operator in the United Arab Emirates (UAE), with EBITDA margins of about 30%-35% and good cash flow visibility. The company proposes to fully refinance its capital structure through the issuance of $1,650 million term loan B and senior secured notes, leading to an opening leverage of adjusted debt to EBITDA of about 7.5x in fiscal 2019. We are assigning our preliminary 'B' ratings to GEMS and to the company's secured first-lien loan and bond. The stable outlook reflects our view of broadly stable EBITDA margins and positive free operating cash flow (FOCF) generation, with expected S&P Global Ratings-adjusted debt to EBITDA of 6.5x-7.0x in 2020.
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