Moody’s drops Global Eagle debt to B1

Moody's Investors Service said it downgraded Global Eagle Entertainment, Inc.'s senior secured rating to B1 from Ba3 following a change in its capital structure.

The company plans to eliminate the prior proposed second-lien term loan and increase its first-lien term loan to $500 million from $460 million prior.

The agency also downgraded the first-lien revolving credit facility to B1 from Ba3.

The shift in structure eliminates the loss absorption from the prior second-lien debt and results in a lower rating for the first-lien facility.

Moody's withdrew Global Eagle’s B3 second-lien rating as this debt will not be issued. It also affirmed the B1 corporate family rating and B1-PD probability of default rating.

The outlook remains stable.

Global Eagle will raise less cash than it previously planned and its liquidity will modestly deteriorate. Moody's said it expects the company to have about $100 million of cash following the transaction and repayment of debt from EMC. Consequently, it downgraded the company’s speculative grade liquidity rating to SGL-2 from SGL-1.

Moody's said it expects Global Eagle to use cash on hand for M&A and capex, including the potential buy out of a joint venture partner.

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