S&P drops BCM Ireland, Valentia

Standard & Poor's said it lowered its long-term corporate credit ratings on BCM Ireland Finance Ltd., BCM Ireland Holdings Ltd. and Valentia Telecommunications upc - the parent companies of eircom Ltd. - to B+ from BB-.

The agency said that this follows the announcement of a €425 million payment-in-kind note issue by BCM Ireland Preferred Equity Ltd., the newly created parent company of BCMIF, to fund a dividend payment to shareholders Babcock & Brown Capital Ltd. and certain affiliates and eircom ESOP Trustee Ltd.

The outlook is stable.

According to S&P, the ratings on BCM Ireland Holdings' €3.3 billion senior secured facilities were lowered to B+ from BB- and the ratings on its €350 million second-lien loan and BCM Ireland Finance's €350 million subordinated floating-rating notes were lowered to B- from B.

The related recovery ratings of 2 on the senior secured facilities and 5 on the second-lien loan were affirmed, the agency said.

At the same time, S&P said it assigned its B+ long-term corporate credit rating to BCM Ireland Preferred Equity Ltd. and its B- long-term subordinated debt rating to the €425 million floating-rate senior PIK note issue due 2017.

The downgrade reflects higher-than-expected leverage for the group due to the PIK note issue, which comes not long after a highly leveraged buyout in August of eircom Group, the owner of Valentia and signals a more aggressive than expected financial policy on the part of BCM Ireland Preferred's owners, S&P noted.

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