Moody's downgrades Gartmore

Moody's Investors Service said it downgraded to Ba3 from Ba2 the corporate family rating of Gartmore Investment Management plc, assigned a Ba3 rating to the new senior credit facility to be issued by Oxford Acquisition IV Ltd. and Oxford US Acquisition LLC and downgraded Oxford Acquisitions III Ltd.'s senior credit facility to Ba3 from Ba2.

The outlook is stable.

Proceeds from the new loan will be used to repay Oxford Acquisitions III's credit facility.

The agency said the Ba3 rating assigned to the new facility and the downgrade of the existing facility reflect the significant increase in financial leverage generated by the transaction. Borrowings under the new facility will total £512 million, compared with £300 million previously.

In addition to repaying the existing facility, the proceeds will be used to pay down more junior elements in the capital structure, leaving payments under the senior credit facility more exposed to any future adverse experience developments, Moody's said, and a number of the covenants under the previous facility have either been removed or weakened, generally reducing the protection available to creditors. In particular, a number of ratios have been eased, shareholder dividends are now more easily permitted and certain other forms of additional debt are now possible.

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