Moody's lowers Hurtigruten view to negative

Moody's Investors Service said it changed the outlook to negative of stable on Silk Bidco AS, the owner of Norwegian cruise operator Hurtigruten AS.

The agency also said it affirmed the B2 corporate family rating and B2-PD probability of default rating, as well as the B2 ratings assigned to the company's existing senior secured bank facilities, consisting of a €575 million term loan B and €85 million revolving credit facility.

The action follows the launch by Hurtigruten of a proposed repricing and add-on on its existing term loan B.

The proceeds of a proposed €80 million add-on will be used to refinance an existing NOK400 million bond, sitting outside of the restricted group and add cash to the balance sheet to fund capital expenditures, Moody's explained.

The outlook revision reflects Hurtigruten's very high leverage for the B2 rating category and its continued aggressive debt-financed capital expenditures, which will strain free cash flows and liquidity in the next 18 months, the agency said.

The ratings reflect the positive earnings trends posted in recent quarters and the solid earnings growth prospects, owing to solid advance customer bookings and the delivery of two explorer vessels in 2019, Moody's said.

The agency said it anticipates an increase in Hurtigruten's gross debt-to-EBITDA ratio by about 60 basis points to 6.6x from an estimated 6x at the end of September 2018.

While favorable business fundamentals and increasing pre-bookings should support higher earnings over time, leverage will remain elevated in the next 18 months, Moody's said.

© 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.