7/4/2019, 2:26 PM (Source: TeleTrader)
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Moody's warns on Merlin's ratings amid buyout deal

Merlin Entertainments Plc's backing for the proposal to take it private is seen boosting leverage, Moody's Investors Service said on Thursday and placed the London Eye owner under review with negative implications. The company's corporate family rating and the grade for $400 million and $700 million senior notes due 2026 and 2022, respectively, is Ba2. The credit appraiser said the revision may also affect the Ba2-PD probability of default rating and noted that the details of the £5.9 billion cash transaction with regard to equity and debt aren't yet published.

"According to the company's disclosure the buyer secured approximately £3.8 billion of debt. This is significantly higher compared to Merlin's current debt level of circa £1.3 billion and will likely result in the Moody's adjusted leverage increasing well above the downgrade trigger of 5x from 3.9x in 2018," the update adds and reveals the analysis should be complete by the fourth quarter.

The probability of "significant" rise this year in earnings before interest, taxes, depreciation and amortization (EBITDA) is slim, the rating agency said and estimated that deleveraging may only begin in 2020. Largest shareholder Kirkbi A/S formed a consortium with Blackstone Group Inc. and Canada Pension Plan Investment Board (CPPIB) for the acquisition.

Baha Breaking News (BBN) / IT