Moody's rates Delta-CAIW loans B3

Moody's Investors Service said it assigned a first-time B3 corporate family rating and a B3-PD probability of default rating to Gamma Infrastructure II BV (Delta-CAIW), the top entity of the restricted group that will combine CIF Holding BV (CAIW) and Delta Comfort BV (Delta).

The agency also said it assigned B3 ratings to the €500 million senior secured term loan B due 2025, €120 million of senior secured capital expenditure/acquisition facility due 2024 and €30 million of senior secured revolving credit facility due 2024 issued by Gamma Infrastructure III BV, a subsidiary of Gamma Infrastructure II.

The proceeds from the term loan B, together with €38 million of cash and €385 million of equity from EQT Infrastructure III fund and certain co-investors will be used to refinance €193 million of existing debt at Delta, which was acquired by EQT in February 2017, Moody's said.

The proceeds also will fund the acquisition of CAIW, refinance CAIW's existing debt and leave about €2 million of cash on balance sheet after closing, the agency said.

The ratings reflect the group's relatively small scale of operations and high adjusted gross leverage of about 5.7x in 2017 with material expansion capital expenditure requirements in the first few years, which will lead to negative free cash flow generation, Moody's said.

The rating is nevertheless supported by the group's strong position and good operating performance in its network coverage areas, its superior network quality and low subscriber churn, the agency said.

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