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Moody's rates East Line notes
Moody's Investors Service said it assigned a prospective B3 rating to the new U.S. dollar-denominated fixed-rate notes to be issued by East Line Capital SA. Moody's has also assigned a prospective B3 senior implied rating to FML Ltd., trading as East Line.
The outlook is stable.
East Line Capital is a Luxembourg-incorporated special-purpose orphan company that will lend the proceeds of the notes to a subsidiary of East Line, CJSC International Airport Domodedovo via a loan agreement. East Line is an Isle of Man holding company that owns a number of businesses operating predominantly in Russia. A number of other East Line subsidiaries guarantee the borrower's obligations under the loan.
The prospective B3 rating reflects East Line's ownership of key airport infrastructure at Moscow's Domodedovo Airport, the expected high growth rates in this business and the capital expenditure and debt requirements needed to accommodate this, the legal, political and economic background against which East Line operates, and East Line's ownership, group structure and corporate governance, which militates against transparency.
The notes benefit from the terms of the loan, which, among other things, restrict the incurrence of new debt, mergers and acquisitions, and distributions to shareholders if certain EBITDA-related covenants are not met. Furthermore, the loan requires that the borrower and the guarantors (together with any required new guarantors) must account for at least 65% of the East Line group's consolidated assets and 60% of the group's consolidated revenues, which should ensure that the holders of the notes do not suffer from material structural subordination.
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