Moody's downgrades Rank Group

Moody's Investors Service said it assigned a Ba2 corporate family rating to The Rank Group Plc and downgraded Rank Group Finance plc's senior unsecured long-term debt ratings to Ba2 from Baa3.

The outlook is negative, reflecting the fact that Deluxe Media Services remains unsold and therefore remains a drain on overall profits and cash flows, the challenges for Rank to reach its targeted level of revenue growth and operating margins on a sustainable basis and a degree of strategic uncertainty with regard to potential financial buyer interest in Rank, the agency said.

The downgrade was prompted by Rank's announcement that it will distribute £200 million to shareholders following the completion of the Deluxe Film's disposal, the group's weak operating performance in 2005 and Moody's expectation that Rank's more limited business scope and less diversified business profile, combined with its increased leverage, will result in a considerably weakened financial profile.

The Ba2 ratings reflect Rank's decision to adopt a dividend policy more in line with its reduced profit generation, assume that Rank's leverage will not deteriorate above 4x net debt to EBITDA in 2006 and further assume that these ratios will show measurable improvement from 2007 onwards with commensurate improvements in retained and free cash flow generation, Moody's said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.