Fitch puts Sunrise on negative watch

Fitch Ratings said it placed Sunrise Communications Holdings SA's long-term issuer default rating of BB+ on Rating Watch negative.

The instrument ratings also are placed on negative watch.

The action follows news of Sunrise's announced intention to acquire UPC Switzerland from Liberty Global, in a transaction that values the cable operations at CHF 6.3 billion, Fitch said.

The agency said it recognizes the industrial logic of the transaction, which will consolidate Sunrise/UPC Switzerland's position as the second-largest convergent player in the market.

The acquisition will be partly financed by a CHF 4.1 billion rights issue, providing balance to the leveraging effect of the transaction, Fitch said.

The deal will add about 1x to Sunrise's net debt-to-EBITDA ration, the agency said.

Fitch said it will resolve the rating watch on completion of the deal, which remains subject to Sunrise shareholder approval, the success of the rights issue and regulatory consent.

The acquisition will boost Sunrise's operating scale and market position considerably, the agency said.

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