Moody’s rates Mitel B2, facility B1

Moody's Investors Service said it assigned Mitel Networks Corp. a B2 corporate family rating, B3-PD probability of default rating and B1 senior secured credit facility ratings.

The agency also assigned an SGL-2 speculative grade liquidity rating.

The outlook is stable.

Net proceeds from the new $300 million first-lien term loan B (Mitel's U.S.-based subsidiary, Mitel US Holdings, Inc., is a co-borrower), along with $140 million in revolving facility drawings will be used to fund the $426 million acquisition of ShoreTel Inc., on an enterprise value basis.

“Mitel's B2 CFR reflects Moody's view that leverage (adjusted Debt/EBITDA) will decline to 5.5x by the end of 2018 after increasing to 6.6x before synergies because of the acquisition of ShoreTel, Inc. (not rated; transaction expected to close during September 2017), execution risks related to the company's acquisition strategy, vulnerability to competition from larger players, and related revenue/margin pressures in Mitel's core premise-based PBX telecom business,” Moody’s said in a news release.

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