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Moody's lifts Skype to B1
Moody's Investors Service said it upgraded Springboard Group Sarl's ("Skype") corporate family rating to B1 from B2, affirmed its probability-of-default rating at B2 and affirmed Springboard Finance LLC's $30 million senior secured revolving credit facility and upsized $800 million senior secured term loan at B1 (LGD3) with a revised loss-given-default rate of 34% (previously 43%).
The outlook remains stable.
The proceeds of the increase in the term loan and cash on hand will be used to repay about $129 million outstanding under the eBay pay-in-kind seller note.
The agency said the upgrade is due to the company's better-than-projected operating performance over the past six months, strong liquidity position and rapid expected deleveraging even after factoring in the roughly $100 million in additional senior debt the company incurred at the end of 2009 to help pay for the settlement of the litigation among the private equity groups that acquired the company and Skype's founders.
Skype's corporate family rating continues to reflect the significant industry and technology risks inherent to the rapidly evolving field of peer-to-peer internet communications and the wider deployment of voice-over-internet-protocol technology across the world, in addition to competitive threats from incumbent carriers, other technology developers, social networking sites and regulatory bodies, Moody's said.
On the other hand, the agency said near-term prospects are more favorable as the company capitalizes on its significant global user base and the quality of its product, and Moody's expects Skype's adjusted debt-to-EBITDA ratio to have declined to about 4.7 times at year-end 2009.
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