DBRS places Rogers, Shaw under review

DBRS said it placed all its ratings for Rogers Communications Inc. under review with negative implications and all its ratings for Shaw Communications Inc. under review with developing implications.

The placements follow Rogers’ announcement of its planned combination with Shaw in a deal valued at C$26 billion.

“The under review with negative implications status reflects DBRS Morningstar’s view that while Rogers’ business profile should benefit from increased scale, an enlarged geographic footprint, and enhanced spectrum license portfolio and potential cost synergies, the benefits do not completely offset the risks associated with the initial increase in financial leverage as lease-adjusted debt-to-EBITDA may increase above five times on an unadjusted basis and assuming leveraged acquisition,” the agency said in a press release.

In Shaw’s case, the review reflects Rogers’ potential assumption of about C$6 billion of Shaw’s debt should the deal close according to terms substantially similar to those proposed. DBRS said it expects Shaw’s debt will effectively rank pari passu with Rogers’ senior unsecured indebtedness.

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