Moody's affirms Mitel

Moody's Investors Service said it affirmed Mitel Networks Corp.'s B3 corporate family rating and B3 probability of default rating as well as its B1 (LGD2, 25% from 29%) senior secured first-lien bank credit facility and Caa1 (LGD5, 70% from 78%) senior secured second-lien bank credit facility.

The outlook is stable.

Recent debt reduction will continue and result in somewhat improved leverage and coverage measures, which will provide Mitel with enhanced prospects of an orderly and cost-effective roll-over of its debts, the agency said.

While term debts mature in 2014 and 2015, it is likely that a comprehensive refinance is required given the inter-relationships between various facilities, the agency added. A refinance will also obviate financial covenant compliance issues as thresholds become more stringent starting in January, 2012.

The ratings reflect vulnerability to competition resulting from its relatively small aggregate scale and from margin performance that does not suggest a strongly positioned niche telecommunication equipment/services offering, the agency said.

The ratings consider Mitel's ability to generate free cash flow, the agency added.

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