S&P: Merlin on positive watch

Standard & Poor's said it placed the B+ long-term corporate credit rating on Merlin Entertainments Sarl on CreditWatch with positive implications.

The agency said it placed the BB- rating on the £1.5 billion senior secured multi-currency facilities issued by Merlin Entertainments Group Luxembourg 2 Sarl and related entities on CreditWatch with positive implications.

The recovery rating on the facilities is unchanged at 2, reflecting 70% to 90% expected default recovery.

The CreditWatch placement follows news that Merlin's prospective U.K. parent, Merlin Entertainments plc, is planning an initial public offering on the London Stock Exchange, S&P said.

The CreditWatch placement reflects the likelihood that the ratings will be upgraded by one notch on completion of the IPO and planned debt reduction with the IPO proceeds, the agency said.

Merlin Entertainments plans to raise about £200 million in proceeds, which it will use to reduce net debt and pay costs associated with the IPO, S&P said.

Existing shareholders are expected to sell a proportion of their shareholding in the IPO with a targeted free float of at least 20%, the agency said.

S&P said it forecasts the debt reduction, coupled with sound operating performance and earnings growth in 2013, will strengthen Merlin's financial risk profile.

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