S&P: Matterhorn notes BB-, loan BB

Standard & Poor's said it affirmed its B+ long-term corporate credit rating on Matterhorn Mobile Holdings SA, the ultimate holding company of Orange Communications SA. The outlook is stable.

At the same time, the agency said it assigned a recovery rating of 2 and issue rating of BB- to the proposed CHF180 million senior secured notes maturing 2019 to be issued by Matterhorn Mobile SA.

The agency also assigned a recovery rating of 1 and issue rating of BB to the proposed CHF 100 million super senior revolving credit facility to be borrowed by Matterhorn Mobile SA, Orange Communications SA and Orange Network SA.

The recovery ratings on existing senior secured and unsecured notes are unchanged at 2 and 6, and the related BB- and B- issue ratings were affirmed.

S&P said the ratings reflect its understanding that the proceeds of the note issuance, along with cash, will be used to repay CHF 102 million in existing bank debt and to distribute a CHF 90 million dividend to Orange Switzerland's shareholders.

The agency said the recapitalization initiative, only months after the leveraged buyout of the company from France Telecom SA, demonstrates the aggressive nature of Matterhorn Mobile Holdings' financial policy. That said, the agency said the negative impact on credit metrics of the shareholder reward is within the headroom that existed previously.

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