Moody’s drops Getty, loans, notes

Moody's Investors Service said it downgraded Getty Images, Inc.'s corporate family rating one notch to Caa1 from B3 and probability of default rating to Caa1-PD from B3-PD, reflecting its view that the company will need more time than previously expected to improve credit metrics, including leverage and free cash flow.

The agency also downgraded the company's senior secured credit facilities to B3 and the senior unsecured notes to Caa3.

The outlook was changed to stable from negative.

In addition, Getty announced plans to issue $252.5 million of new 10˝% senior secured notes in exchange for $100 million of cash plus roughly $240 million of existing 7% senior unsecured notes representing a 36% discount to face value. Moody's views this transaction as a distressed exchange and will assign a "limited default" or LD to the company upon closing. The LD designation will be removed in three days.

Moody’s said the downgrade of Getty Images' corporate family rating to Caa1 reflects its updated projections indicating excessive leverage with debt-to-EBITDA exceeding 9 times (including the agency’s standard adjustments) through the end of 2016 as a result of high single digit percentage revenue declines in the company's Midstock segment for fiscal year 2015 and free cash flow-to-debt of less than 1% over the next 12 months.

As a result, the company will need more time to turnaround operating performance sufficiently to restore credit metrics to be in line with a higher debt rating.

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