Moody’s Rating Agency on Friday affirmed Intralot’s B1 rating on the company’s senior unsecured notes and said the outlook on all ratings remained negative.
“Our decision to affirm Intralot’s ratings balances its double-digit earnings growth in the first half of fiscal 2016, improved cash flow and substantive debt reduction against its reduced size following the sale of several regional businesses,” Donatella Maso, a Moody’s Vice President – Senior Analyst, said in a report.
At the same time, Moody’s assigned a (P)B1 rating to Intralot’s proposed 250 million euros senior unsecured notes due 2021 to be issued by Intralot Capital Luxembourg S.A. The proceeds from the new 2021 notes together with 49 million euros cash on balance sheet will be used to redeem the existing 2018 notes and pay transaction fees.
Moody’s issues provisional ratings in advance of the final sale of securities and these ratings reflect Moody’s preliminary credit opinion regarding the transaction only. Upon a conclusive review of the final documentation, Moody’s will endeavour to assign a definitive rating to the facilities. A definitive rating may differ from a provisional rating.
The reaffirmation reflects Intralot’s solid operating performance during the first six months of fiscal year (FY) 2016 in terms of company reported EBITDA growth (+10%) and improved free cash flow generation, the extension of the debt maturity wall and the reduced interest costs in conjunction with the proposed refinancing. In addition, Moody’s understands that, as condition to the proposed issuance, Intralot must receive minimum commitments of 200 million euros by 30 September for new three-year syndicated bank facilities, and that 70 million euros of the current oustanding will be repaid with the proceeds from some asset disposals by year-end.
These positives are, however, counterbalanced by the company’s reduced size following certain M&A transactions such as the disposal of 80% of its Italian and Peruvian operations, and the prospective sale of the Australian/New Zealand business, which will offset short-term benefits from the anticipated debt reduction, with Moody’s adjusted financial leverage forecasted to remain at 3.7x at the end of FY2016 in line with the last twelve month to 30 June 2016.
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