S&P: Telenet unaffected

Standard & Poor's said that its B+ ratings and stable outlook on Telenet Group Holdings NV are unaffected by Liberty Global Inc.'s (B/stable) increased share in Telenet's capital.

Under the existing agreement between Telenet's main shareholders, Liberty Global's 28.1% stake gives it effective control of Telenet's board and significant influence that will lead to the consolidation of Telenet on a global basis under U.S. GAAP, the agency said.

S&P is of the view, however, that there is substantial economic impediment on Liberty Global's ability to upstream cash from Telenet given the existence of significant minority shareholders, and the agency said it has not equalized the ratings on the companies.

Telenet's debt-to-EBITA ratio, at 3.8x, is lower than that of Liberty Global, which has a debt-to-EBITA ratio of 6.0x and its free cash flows are stronger, S&P said. But a more aggressive financial policy on the part of Telenet or a further significant increase in Liberty Global's share of Telenet's capital could result in the ratings being equalized, the agency said.

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