Moody's rates EMI loans Ba3

Moody's Investors Service said it assigned Ba3 (LGD3) ratings to MTL Publishing LLC's proposed senior secured first-lien credit facilities (comprised of a $50 million revolving credit facility due 2020 and $1.12 billion senior secured term loan B due 2022) and affirmed its B1 corporate family rating and B1-PD probability of default rating. The outlook is stable. The company does business as EMI Music Publishing in the United States.

Loan proceeds plus existing cash balances will refinance the existing credit facilities (consisting of an undrawn $75 million revolver due 2017 and $978.4 million outstanding term loan B due 2018), pre-fund a roughly $80 million repayment of the 12˝% senior notes due 2020 and pay a $100 million distribution to shareholders ($50 million of which will be funded by balance sheet cash).

The refinancing will increase absolute debt levels and elevate the company’s Moody's-adjusted pro forma total debt-to-EBITDA ratio to 5.6 times from 5.1 times as of March 31, but the agency said EMI has enough capacity at the B1 rating level to absorb this incremental debt.

Moody’s said EMI’s B1 corporate family rating embeds the company's high pro forma leverage as well as uncertainties related to the fundamental decline in revenue that the music publishing industry has experienced over the past few years.

The rating is supported by the company's leading global position in music publishing and its strategic importance to Sony Corp. (Ba1/positive) via its joint venture, Sony/ATV, the agency said.

© 2015 Prospect News.
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