Moody's might downgrade Unitymedia

Moody's Investors Service said it put the Ba3 corporate family rating of Unitymedia GmbH under review for possible downgrade following the announcement that LGI and a subsidiary have entered into an agreement with Unity Media SCA to acquire the capital stock of Unitymedia for €2 billion.

The existing instrument ratings within the Unitymedia group, including the Ba3 senior secured debt rating and B2 senior debt rating, are unaffected, reflecting the agency's expectation that the existing debt facilities will be fully repaid upon completion in line with the acquirer's stated intention. According to Moody's, the acquiring entity, UPC Deutschland, is raising new debt, which will be pushed down into Unitymedia following completion to effect the repayment of Unitymedia's existing debt.

The agency said the review reflects its expectation that the company's post-transaction credit profile will be measurably weaker than the current one and that the increased debt will reduce the company's financial flexibility and ability to generate free cash flow.

Moody's said it continues to acknowledge the steady growth of the company's cable business and its strong market position within the German cable TV, internet and telephony.

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