S&P rates Oak Leaf loans B+

Standard & Poor's said it assigned a B+ preliminary long-term corporate rating to Oak Leaf BV, a holding company set up for the acquisition of D.E. Master Blenders 1753 BV by a consortium of investors.

The outlook is positive.

The agency also said it assigned a preliminary B+ rating to the proposed senior secured debt facilities to be borrowed by Oak Leaf, in line with its corporate credit rating.

The preliminary recovery rating on these facilities is 3, indicating 50% to 70% expected default recovery.

The ratings reflect the company's satisfactory business risk profile and highly leveraged financial risk profile, S&P said.

The agency also said it factors in an anticipation that the D. E. Master Blenders acquisition will be completed as presented and that Oak will merge into the company post-transaction.

S&P said it estimates the consortium will acquire D.E. Master Blender's outstanding shares for a total of €7.9 billion, made up of €3 billion of debt, €3.7 billion of common equity and €1.2 billion of perpetual preferred equity.

This preferred stock is treated as 50% equity-like under the agency's hybrid criteria. The agency said it recognizes that the preferred stock provides the company with some financial flexibility, such as no maturity and deferability.

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