S&P lowers Play, rates PIK notes CCC+

Standard & Poor’s said it lowered the long-term corporate credit rating on Play Holdings 2 Sarl to B from B+.

The agency also said it lowered the rating on the senior secured notes issued by Play Topco SA to B from B+ and on its senior unsecured notes to CCC+ from B-.

S&P also said it assigned a CCC+ rating to the proposed payment-in-kind toggle notes to be issued by Play Topco.

The outlook is stable.

The downgrades follow news that Play plans to issue €415 million of PIK toggle notes at Play Topco, the group’s top holding company, S&P said, and distribute the funds to its shareholders.

Following this news, the agency said it is revising the assessment of the group’s financial policy to reflect its more aggressive shareholder policies, which include two sizable dividend recaps made within a year.

S&P also said it therefore believes that it is unlikely that the group will comfortably and sustainably de-leverage to less than 5x.

The ratings remain constrained by meaningfully lower profitability and product diversity than most of its competitors, the agency said, as well as narrower network coverage.

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