Moody’s cuts Adria PDR, rates notes B2

Moody's Investors Service said it affirmed Adria Midco BV’s B2 corporate family rating and changed the outlook on the ratings of Adria and its wholly owned subsidiary United Group BV to negative from stable.

Concurrently, the agency assigned a B2 rating to the proposed €1.35 billion worth of senior secured notes due 2022-2024, consisting of fixed- and floating-rate tranches, to be issued by United Group.

The B2 rating on the company's existing €775 million senior secured notes due 2020 is unchanged and will be withdrawn upon repayment of these instruments.

Moody's also downgraded Adria's probability of default rating to B2-PD from B1-PD.

The action follows the announcement that Adria agreed to acquire Central European Media Enterprises Ltd.'s television businesses in Slovenia and Croatia for a total consideration of €230 million.

"The change in outlook to negative reflects the material increase in leverage at Adria level owing to this refinancing and M&A transaction. As a result, the company has limited headroom for deviation against its business plan over the next 12-18 months," Gunjan Dixit, Moody's vice president, senior credit officer and lead analyst for Adria, said in a news release.

The agency estimates that the company's gross debt/EBITDA will increase to 6.8 times from around 5 times pre-transaction.

"This high leverage is to an extent balanced by the company's solid operating momentum, track record of revenue and EBITDA growth, and improved scale and scope of operations over the past few years," Dixit added in the release.

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