Moody's downgrades Shine

Moody's Investors Service said it downgraded Shine Holdco III Ltd.'s corporate family rating to B3 from B2 and probability of default rating to B3-PD from B2-PD.

Moody's also said it downgraded the ratings on Shine Acquisition Co Sarl's $545 million senior secured first-lien term loan due 2024 to B2 from B1, the rating on its $75 million revolving credit facility due 2022 to B2 from B1 and the rating on its $175 million senior secured second-lien term loan due 2025 to Caa2 from Caa1.

The first-lien and second-lien facilities are co-borrowed by Shine Acquisition and Boing US Holdco Inc.

The outlook remains stable.

The downgrades were driven by the company's high adjusted leverage of 7.3x as of March 2019, as well as an expectation that de-leveraging will be limited in the next 18 months, Moody's said.

That's because investments in support functions to support the U.S. expansion will likely offset the positive impact of cash-funded acquisitions and revenue ramp-up of sites opened or renovated in recent years, the agency said.

The ratings also consider the company's significant cash balances, reflecting proceeds from recent sale-and-leaseback transactions that will enable the company to fund small bolt-on acquisitions and expansionary capital expenditure in the United States, Moody's said.

Liquidity is further supported by the undrawn $75 million revolving credit facility due 2022 and the absence of large debt maturities before 2022, the agency said.

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