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Moody's rates Eden Springs notes B2
Moody's Investors Service said it assigned a provisional B2 rating to the €160 million of new senior secured fixed-rate notes due 2019 issued by Hydra Dutch Holdings 2 BV, the parent holding company of Eden Springs. Concurrently, Moody's changed to negative from stable the outlook on the B2 corporate family rating, B1-PD probability of default rating and the B2 rating on the existing €210 million senior secured floating-rate notes due 2019 and affirmed these ratings.
A €35 million portion of the new notes will be exchanged for an equivalent amount of the existing floating-rate notes. Remaining proceeds will be used, among other things, to finance the acquisition of Nestle Waters Direct.
The agency said the outlook change reflects its expectation that, immediately following the Nestle Waters Direct acquisition, Eden Springs' adjusted debt-to-EBITDA ratio will increase to around 5.4 times on a pro forma basis, whereas Moody's had previously expected a reduction in gross leverage to around 4.6 times by the end of 2014. Furthermore, Moody's believes that the expected synergies may prove challenging to achieve and be subject to delays given the scale and geographic spread of Nestle Waters Direct's operations. Moreover, the agency said the company's cash flow generation will be constrained in 2015 as a result of integration costs estimated at around €16.7 million and increased capex spend of €30 million, compared with €22 million previously forecasted.
However, Moody's views the acquisition of Nestle Waters Direct as positive for the company's business profile, positioning it as the clear leader in the European bottle water cooler segment.
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