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Moody's: Encore view developing
Moody's Investors Service said it changed Encore Acquisition Co.'s outlook to developing from negative in response to Encore's announcement that it is exploring strategic alternatives to increase shareholder value, including a sale or a merger.
Encore's corporate family and probability-of-default ratings are Ba3 and its senior subordinated notes are rated B1 (LGD5, 81%).
If Encore were to be acquired, any effect on ratings would depend on the credit profile of the buyer and how the acquisition is funded, the agency said.
Moody's noted that the subordinated notes contain a change-of-control provision that allows the noteholders to put the bonds back to the company upon a merger or consolidation at 101% of par plus accrued interest.
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