S&P moves Mitel view to stable

S&P said it changed Mitel Networks (International) Ltd.’s outlook to stable from negative.

Earlier this month, Mitel entered a strategic partnership with RingCentral Inc., which paid Mitel $600 million upfront, $300 million in cash and $300 million in stock, and will provide a $50 million earn-out expected over the next 24-36 months. Mitel used $300 million in cash to repay its $200 million term loan.

“As a result, we now forecast debt to EBITDA (S&P Global Ratings' adjusted) of 8.5x-9x for fiscal year-end 2021, below our previous expectation of 10.5x. Furthermore, Mitel has announced an additional debt reduction of about $250 million from the monetization of RingCentral`s stock in the near term. Including this second tranche of debt repayment, which we view as credit positive, we forecast Mitel's leverage could improve to the 7x-7.5x range,” S&P said in a press release.

The agency also affirmed Mitel’s CCC+ issuer rating, the CCC issue-level with 3 recovery ratings on Mitel`s first-lien senior secured debt and the CCC- issue-level with 6 recovery ratings on its second-lien senior secured debt.

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