S&P puts MasMovil on positive watch

S&P said it placed all its ratings on Lorca Telecom, the holding company of MasMovil Group, and its debt on CreditWatch with positive implications.

MasMovil and Orange SA have agreed to form a 50-50 joint venture valued at €18.6 billion, with €10.9 billion for MasMovil and €7.8 billion for Orange Spain. The transaction, still subject to regulatory approval, will be financed by €6.6 billion covenant lite debt, of which €5.85 billion will be distributed between Orange and MasMovil proportionally, including an equalization payment reflecting different levels of indebtedness of the two entities on a stand-alone basis.

MasMovil's existing debt will remain.

“The CreditWatch reflects that, if the transaction is approved, we could raise the ratings on MasMovil and its senior unsecured debt by up to two notches based on the conservative financial policy target and expected support from Orange SA,” S&P said in a news release.

“Additionally, potentially improved recovery prospects thanks to the JV's stronger business could prompt us to raise the ratings on the senior secured debt by up to three notches.”

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