Moody's downgrades Mitel

Moody's Investors Service said it downgraded MLN US Holdco LLC's (Mitel) corporate family rating to Caa3 from Caa1, probability of default rating to Caa2-PD/LD from Caa1-PD, existing senior secured first-lien bank credit facility rating to Caa3 from B3, and existing senior secured second-lien bank credit facility rating to Ca from Caa3. Moody's appended an /LD designation to Mitel's PDR to reflect a limited default resulting from its recently completed distressed debt exchange. The /LD will be removed after three business days.

This rating action follows Mitel's uptiering transaction on Oct. 18 , whereby a majority of the company's lenders agreed to changes in credit agreements that enabled the company to issue debt that is senior to the outstanding debt. The downgrade of the existing first- and second-lien bank debt reflects its junior position to the new $156 million super priority term loan, $575 million second-out term loan and $124 million third-out term loan, Moody’s said.

Mitel used the proceeds from the second-out and third-out debt to buy a portion of its outstanding first-lien term loan and second-lien term loan respectively on a non-pro-rata basis at below par. Post-debt exchange amounts outstanding under the first- and second-lien term loans are $281 million and $108 million, respectively.

The outlook is stable.

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