Moody's puts Vistra on review

Moody's Investors Service said it placed Vistra Group Holdings (BVI) I Ltd.'s B2 corporate family rating on review for downgrade following news that it plans to raise $222 million of debt to finance a dividend for shareholders.

Moody's also said it placed Vistra's B2 rating on the first-lien term loan B due 2022 and revolving credit facility due 2020 on review for downgrade.

The agency also said it placed the B3 rating on the second-lien term loan due 2023 on review for downgrade.

The downgrade review will focus on Vistra's proposed $222 million dividend recapitalization and will likely result in a one notch downgrade, if completed, Moody's said.

Vistra has proposed a shareholder distribution that will be financed through up-sizing its existing first- and second-lien term loans, by $96 million and $126 million, respectively, the agency said.

As a result, the company's debt-to-EBITDA leverage ratio after the transaction is expected to remain at more than 7x over the next 12- to 18-months, which is higher than the 6.5x downgrade trigger, Moody's said.

The ratings reflect the company's aggressive financial posture, as evidenced by its willingness to further leverage its balance sheet to fund a dividend recapitalization, the agency said.

The high leverage will be partially offset by the company's solid operating momentum, with both acquired and organic revenue growth and synergies from its cost-saving initiatives driving ongoing earnings expansion, Moody's said.

The ratings benefit from the company's strong business profile as evidenced by its predictable revenue streams, the agency said.

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