Moody's: Pinafore sale is negative

Moody's Investors Service said Pinafore Holdings BV's announcement that it will sell its air distribution division in a transaction sponsored by the Canada Pension Plan Investment Board is viewed as a negative credit event.

The aggregate consideration payable in the transaction will be roughly $1.1 billion in cash

Yet, an amendment to the company's credit agreement completed earlier this month and an amendment to the company's 9% note indenture completed in July gives Pinafore flexibility to return a significant portion of the cash consideration from the transaction to its shareholders.

As the sale of the air distribution division will reduce business diversification and result in the loss of EBITDA and cash flow generation without an assured equivalent reduction in debt, Moody's said it views the transaction as a negative credit event.

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