Moody's eyes Morrisons for downgrade

Moody's Investors Service said it placed all the ratings of Wm Morrison Supermarkets plc's on review for downgrade, including its Baa2 long-term issuer and bond ratings. The outlook has changed to ratings on review from stable.

“Today's review for downgrade reflects the announcement on July 3, that its board of directors had recommended an offer to sell 100% of the share capital of the company to a private investment group for a cash consideration of 254 pence per share or a total £6.3 billion excluding debt,” Moody’s said in a press release.

The offer will be financed by more than £3 billion of equity capital to be invested by Fortress, CPP Investments and KREI, and by term loan and revolving credit facilities.

Moody's said it expects that policies under the new owners will likely lead to a deterioration of Morrisons' key debt metrics and to less conservative financial policies. Morrisons' ratings could be downgraded by multiple notches.

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