Moody's ups Regus view to positive

Moody's Investors Service said it changed the outlook of Regus Group plc's B3 corporate family rating to positive from stable due to its solid operating performance during 2005.

Moody's said it also changed the outlook on the B3 rating of Regus Corp.'s $155 million senior secured bank credit facility to positive from stable.

Moody's noted its rating action reflects Regus' ongoing solid operating performance since it emerged from Chapter 11 in 2004, as evidenced by rising occupancy rates and growing income per workstation, which resulted in the group generating cash flow in line with earlier expectations and reducing debt ahead of schedule.

At the same time, ratings remain constrained by the high risk associated with Regus' business model focused on a developing sector of the cyclical property market, the low barriers to entry existing at the local level and the operational gearing resulting from a high fixed cost base, which is amplified by the mismatch remaining between leases entered into and those granted, the agency said.

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