Moody's puts Stratos on review

Moody's Investors Service said it placed Stratos Global Corp.'s B1 corporate family and probability-of-default ratings under review for possible downgrade, placed the company's Ba2 (LGD, 23%) senior secured rating under review with direction uncertain, placed its B3 (LGD5, 77%) senior unsecured rating under review for possible upgrade and affirmed its speculative grade liquidity rating at SGL-3.

The review follows the company's announcement that it agreed to be acquired by CIP Canada Investment Inc., which will receive $250 million in debt funding from a subsidiary of Inmarsat to finance the acquisition. Following the close of the transaction, CIP Canada will beneficially own Stratos through an independent Canadian trust until at least April 2009, at which time Inmarsat will have the ability to exercise a call option to acquire Stratos.

The agency said Stratos' credit profile may ultimately benefit should it eventually be acquired by Inmarsat. However, Moody's believes Stratos does not have any additional debt capacity within its existing rating and is concerned over the significant intermediate time period during which Stratos will be beneficially owned by a private equity investor, which has potentially financed the acquisition of Stratos entirely with debt.

The uncertain review direction of the senior secured rating reflects the possibility that Moody's will put these obligations ahead of CIP Canada's junior-ranking debt within the loss-given-default waterfall, which may in turn raise the rating even if the corporate family rating is lowered.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.