Moody's may lower Masmovil

Moody's Investors Service said it placed under review for downgrade the B1 corporate family rating and the B1-PD probability of default rating of Lorca Holdco Ltd. (Masmovil) following the announcement that Masmovil has launched a takeover bid to acquire Euskaltel, SA for €2 billion in an all-cash offer.

Moody's has also placed under review for downgrade the B1 rating of the existing €2.2 billion backed senior secured credit facility issued by Lorca Finco plc and the B1 rating of its existing €800 million backed senior secured notes issued by Lorca Telecom Bondco, SAU.

Concurrently, Moody's said it has withdrawn the B1 rating of the €1.75 billion backed senior credit facility issued by MasMovil Holdphone SAU, which has been fully repaid prior to this transaction.

“We have placed Masmovil's ratings on review for downgrade because the debt-financed acquisition of Euskaltel will likely result in temporarily weaker than expected credit metrics including leverage peaking at over 6x, based on preliminary calculations before synergies and disposals, at a time when the company had previously grown rapidly through M&A albeit with higher integration and execution risks,” said Carlos Winzer, a Moody's senior vice president and lead analyst for Masmovil, in a news release.

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