Moody's may upgrade COLT

Moody's Investors Service said it has placed the ratings of COLT Telecom Group plc on review for possible upgrade following the launch by the company of a scheme of arrangement under which the shares in COLT Telecom Group plc will be delisted and swapped, on a three for one basis, with London listed shares in COLT Telecom Group SA.

Moody's said about £300 million of new equity funding will be raised by COLT SA, which will be used to retire the company's outstanding convertible debt and subsequently prepay part of the company's outstanding senior notes.

Ratings placed on review for possible upgrade include the B3 corporate family rating and B3 rating of the senior unsecured and convertible notes.

The review for upgrade reflects both the improvements in operational performance demonstrated by the company over the past 15 months, as well as the expectation that the scheme of arrangement will be approved by shareholders and the U.K. courts, and that consequently, the new group will benefit from a significant cash equity injection that will materially reduce short term debt maturities and improve its liquidity profile, the agency said.

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