Moody's rates Regus loan B3

Moody's Investors Service assigned a prospective B3 senior implied rating to Regus Group plc and assigned a prospective B3 rating to the new $155 million guaranteed senior secured credit facility of Regus Corp., a wholly owned subsidiary of Regus.

The senior unsecured issuer rating of Regus Group is prospective Caa1.

The outlook is stable.

Regus has agreed to acquire all the capital stock of HQ Global Workplaces Inc. The purchase price of $288 million and associated costs is expected to be funded by the $218 million proceeds from a public issue of Regus ordinary shares and the $110 million term loan B, an element of the planned $155 million secured credit facility.

Regus Corp. is to be the borrower under the proposed $155 million credit facility. The facility comprises a six-year $110 million term loan B, a $25 million working capital revolver, and $20 million credit-linked letter-of-credit facility, both with a four-year tenor.

Moody's said that the prospective B3 senior implied rating reflects the high business risk associated with operating Regus' geared business model in a developing sector of the cyclical property market. More positively the rating recognizes the strength of Regus' brand name reflecting its position as a leader in the global serviced office industry, as well as the fairly stable demand base which its network and leadership position has enabled the group to maintain during the cyclical downturn.

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