Moody’s cuts, will withdraw Phones4U

Moody's Investors Service said it downgraded all ratings of Phosphorus Holdco plc, including its corporate family rating and probability of default rating to C from Caa1 and D-PD from Caa1-PD, respectively.

The agency also downgraded the rating on the company's £205 million PIK toggle notes due 2019 to C from Caa3. Concurrently, Moody's downgraded the rating on Phones4U Finance plc's £430 million senior secured notes due 2018 to C from Caa1and the rating on the £125 million senior secured revolving credit facility due 2017 to Ca from B1.

There is no outlook and the agency will withdraw all Phones4U's ratings.

Moody’s said the action follows Phones4U's placement into administration on Sept. 15 in the wake of the announcement by EE Ltd. that it will not renew its contract with Phones4U when it expires in September 2015.

Fitch lowers Chester Downs

Fitch Ratings said it downgraded Chester Downs & Marina LLC’s issuer default rating to CCC from B-, along with the rating on its $330 million 9¼% senior secured notes to CCC+ with a recovery rating of RR3 from BB- with a recovery rating of RR1.

Fitch also affirmed all of the ratings related to Caesars Entertainment Resort Properties, LLC, including its issuer default rating at B-, senior secured first-lien credit facility at B+ with a recovery rating of RR2, first-lien notes at B+ with a recovery rating of RR2 and second-lien notes at CCC with a recovery rating of RR6.

For 2016, the agency said it forecasts that Chester Downs will generate negative free cash flow and its leverage will exceed 9x.

This financial profile could make refinancing Chester Downs’ notes by the 2020 maturity date difficult, Fitch said.

The ratings take into account the potential for a second license being awarded within the city limits of Philadelphia, but the issuer default rating is not dependent on the license being awarded, the agency said.

The agency also said it affirmed Caesars Entertainment Corp.’s issuer default rating at CC, along with Caesars Entertainment Operating Co.’s issuer default rating at CC, senior secured first-lien revolving credit facility and term loans at CCC+ with a recovery rating of RR1, senior secured first-lien notes rating at CCC with a recovery rating of RR2, senior secured second-lien notes at C with a recovery rating of RR6 and the rating on its senior unsecured notes with subsidiary guarantees at C with a recovery rating of RR6.

Fitch also affirmed Caesars Growth Properties Holdings, LLC’s issuer default rating at B-, senior secured first-lien credit facility rating at BB- with a recovery rating of RR1 and second-lien notes at B- with recovery rating of RR4.

Corner Investment PropCo, LLC’s issuer default rating also was affirmed at CCC and senior secured credit facility rating at B- with recovery rating of RR2.

S&P lowers Associated Asphalt

Standard & Poor’s said it lowered the corporate credit rating on Associated Asphalt Partners LLC to B from B+.

The agency also said it lowered the rating on its senior secured notes one notch to B- from B. The recovery rating on the notes remains at 5, indicating 10% to 30% expected default recovery.

The outlook is stable.

The downgrades reflect a view of the deteriorating margin environment in the company’s operating territory due to increased competition on the East Coast and supply issues at refiners, S&P said.

As a result, asphalt margins decreased by double-digit percentages compared with 2013 results and Associated Asphalts’ credit measures have weakened, the agency said.

The ratings also consider the company’s sensitivity to weather patterns, potentially lower product demand due to changes in roadwork spending and potential EBITDA margin compression due to volatile crude oil prices, S&P said.

Moody’s ups Air Canada, debt ratings

Moody's Investors Service said it upgraded Air Canada's corporate family rating to B2 from B3, probability of default rating to B2-PD from B3-PD, first-lien senior secured rating to Ba3 from B1, second-lien senior secured rating to B3 from Caa1 and senior unsecured rating to Caa1 from Caa2.

The company's speculative grade liquidity rating was affirmed at SGL-2.

The ratings on Air Canada's 2013-1 class A, class B and class C pass-through trust certificates were upgraded by one notch to Baa1, Ba2 and B1, respectively.

The outlooks were changed to stable from positive.

"The upgrade of Air Canada's ratings is driven by our increased confidence in the carrier's ability to execute its significant expansion plans and cost reduction initiatives in a manner that enables its adjusted EBITDA to expand modestly and allows its adjusted financial leverage to remain under 5.5x," Moody’s vice president and senior credit officer Darren Kirk said in a news release.

S&P: Atlantic Power on watch

Standard & Poor’s said it placed the B corporate credit ratings on Atlantic Power Corp. and affiliate Atlantic Power LP on CreditWatch with negative implications.

The CreditWatch placement follows the departure of the company’s chief executive officer and an unanticipated cut in distributions by the company that triggered a review of the company’s financial plan, S&P said.

The company also revised its distribution payments to a quarterly schedule from monthly payouts, the agency said.

The company has cited a re-evaluation of its medium-term plan, including debt maturities and re-contracting risk from 2017 onward, S&P said.

Atlantic plans to focus on optimization its assets and de-levering its balance sheet to improve both its cost of capital and ability to compete for new investments, the agency said.

S&P: Global Cash on watch

Standard & Poor’s said it placed Global Cash Access Inc.’s BB corporate credit rating on CreditWatch with negative implications.

The CreditWatch listing follows news that the company plans to acquire Multimedia Games Holding Co. Inc. for $1.2 billion in a debt financed transaction, S&P said.

Global Cash will fund the acquisition with an $800 million term loan, $400 million of senior notes and a $50 million revolver, S&P said.

Pro forma for the transaction, the agency said it expects that the company’s adjusted leverage will increase to more than 6x without synergies, from about 1.5x as of June 30.

While the agency said it believes the acquisition will diversify Global Cash’s revenue base and product offerings, the transaction is likely to bring meaningful integration risk as the company enters into the competitive gaming sector.

Moody’s might lift Auxilium

Moody's Investors Serviced said it placed the ratings of Auxilium Pharmaceuticals, Inc. under review for upgrade, including the B3 corporate family rating, B3-PD probability of default rating and Ba3 senior secured rating.

This action follows the announcement that Endo International plc made an offer to acquire Auxilium for about $2.2 billion including debt refinancing.

The speculative grade liquidity rating was affirmed at SGL-4.

Auxilium's board is evaluating Endo's offer, which, if accepted, will be subject to due diligence and other customary closing conditions.

Moody's said the review will consider the final terms of any deal accepted by Auxilium. If an acquisition by Endo occurs, Auxilium's credit profile will benefit from becoming part of a larger, more diversified company with lower financial leverage. The agency anticipates that Auxilium's debt will be repaid under this scenario.

S&P: Answers loans B, CCC+

Standard & Poor’s said it assigned a B corporate credit rating to Answers Corp., along with a B rating and a 3 recovery rating to its proposed $40 million senior secured revolver and $320 million senior secured first-lien term loan.

The 3 recovery rating indicates 50% to 70% expected default recovery.

S&P also said it assigned a CCC+ rating with a 6 recovery rating to the proposed $175 million senior secured second-lien term loan. The 6 recovery rating indicates 0% to 10% expected default recovery.

The outlook is stable.

The ratings reflect the company’s modest revenue base, rapid growth through acquisitions, small share of large, fragmented and evolving end markets and vulnerability to potential declines in online advertising spending, the agency said.

The company’s solid EBITDA margins, increasing revenue contribution from more recurring software-as-a-service revenues and an expectation that Answers will generate positive annual free operating cash flow partially mitigate these weaknesses, S&P said.

Moody’s rates Answers CFR B3, loans B1 & Caa2

Moody's Investors Service said it assigned a B3 corporate family rating and B3-PD probability of default rating to Answers Corp.

Concurrently, the agency assigned a B1 rating to the proposed $320 million first-lien senior secured term loan and $40 million first-lien senior secured revolving credit facility; and a Caa2 rating to the $175 million second-lien senior secured term loan.

The outlook is stable.

Moody’s said the B3 corporate family rating reflects the company's small size, limited operating history, elevated pro forma financial leverage of roughly 9.8 times total debt to LTM EBITDA (incorporating Moody's standard operating lease adjustment, earnings associated with recent acquisitions, and certain non-standard adjustments deemed acceptable to Moody's related to one-time costs, but excluding future synergies), reliance on major search engines for customer traffic and ownership by a private equity sponsor.

Importantly, the rating is constrained by the highly acquisitive growth strategy that produces a rapidly evolving business model and significant pro forma earnings adjustments, making it challenging to estimate a prospective run-rate EBITDA, in the agency’s opinion.

S&P rates Halyard Health loan BB, notes B+

Standard & Poor’s said it assigned a BB corporate credit rating to Halyard Health Inc.

The agency also said it assigned a BB rating to the proposed credit facility, which consists of a $250 million revolving credit facility and a $390 million term loan B.

The recovery rating is 3, indicating 50% to 70% expected default recovery.

S&P also said it assigned a B+ rating to the proposed $250 million unsecured notes with a recovery rating of 6, indicating 0% to 10% expected default recovery.

The outlook is stable.

The ratings reflect the company’s limited history as a standalone entity, operations in highly competitive markets and below average profitability compared with other medical device companies, the agency said.

S&P rates HealthSouth loan BB+

Standard & Poor’s said it assigned a BB+ rating to HealthSouth’s proposed $150 million senior secured loan due 2019.

The recovery rating is 1, indicating 90% to 100% expected default recovery.

The BB+ rating on the company’s revolving credit facility, BB- rating on the senior notes and B- rating on its convertible preferred stock are unchanged.

There also are no changes to the recovery ratings.

The outlook remains stable.

The proceeds will be used to refinance in part the redemption of notes due 2018.

The ratings reflect the company’s weak business risk profile, highlighted by its operation in a single line of business that relies on one source for a large percentage of its revenues, S&P said.

With more than 70% of its total revenues subject to Medicare reimbursement and regulatory changes for inpatient rehabilitation services, the agency said it views HealthSouth as vulnerable in the long term to adverse reimbursement and regulatory risks in its inpatient rehabilitation business.

The ratings also consider the company’s significant financial risk profile, reflecting an expectation that leverage will remain at more than 3x, S&P said.

Moody’s rates HealthSouth loan Baa3

Moody's Investors Service said it assigned a Baa3 (LGD 1) rating to HealthSouth Corp.’s proposed $150 million senior secured term loan due 2019.

Proceeds, along with the recently issued unsecured notes, will be used in part to fund the redemption of the remaining outstanding amount of 7¼% notes due 2018.

HealthSouth's Ba3 corporate family rating remains unchanged given Moody's expectation that credit metrics will not be meaningfully impacted by this transaction. The stable outlook is also unchanged.

Fitch rates Realty Income notes BBB+

Fitch Ratings said it assigned a BBB+ rating to the $250 million aggregate principal amount 4.125% coupon senior unsecured notes due 2026 issued by Realty Income Corp.

The notes were priced at 99.499% of par to yield 4.178% to maturity, or 160 basis points, over the benchmark treasury rate, the agency said.

The proceeds from the offering will be used to redeem $220 million of 6.75% class E preferred stock, repay a portion of the borrowings outstanding under the company’s unsecured credit facility and for general corporate purposes and working capital purposes, which may include acquisitions, Fitch said.

The company has an issuer default rating of BBB+, along with BBB+ ratings on its $1.5 billion unsecured revolving credit facility and $3.5 billion of senior unsecured notes and BBB- rating on its $409.4 million of preferred stock.

The outlook is stable.

The ratings are supported by the company’s geographic diversity, limited tenant concentration and moderate tenant credit risk, Fitch said.

Realty Income’s management team has been and remains cognizant of maintaining consistent credit metrics despite fluctuations attributable to mergers and acquisitions, the agency said.

S&P rates Simmons notes CCC+

Standard & Poor’s said it affirmed the B- corporate credit rating ratings on Simmons Foods Inc.

The agency also said it assigned a CCC+ rating to the company’s proposed $415 million second-lien notes maturing 2021 with a recovery rating of 5, indicating 10% to 30% expected default recovery.

The proceeds will be used to repay debt, pay a dividend and pay fees and expenses, S&P said.

S&P also said it raised the ratings on the company’s $315 million second-lien notes to CCC+ from CCC and revised the recovery rating to 5 from 6.

The outlook is stable.

The company is expected to maintain its improved operating performance in 2014 despite currently negative free cash flow generation, S&P said.

The ratings also reflect the earnings volatility associated with the company’s regionally concentrated poultry operations, history of operating challenges in its pet food segment and modest market position as a vertically integrated chicken processor, the agency said.

S&P rates Sonoco loan BBB+

Standard & Poor’s said it assigned a BBB+ senior unsecured debt rating to Sonoco Products Co.’s new $600 million senior credit facility consisting of a $350 million revolving credit facility due 2019 and a $250 million term loan due 2017.

The company’s other ratings, including its BBB+ corporate credit and A-2 commercial paper ratings, remain unchanged.

The outlook is stable.

Sonoco expects to use the term loan and some usage under its commercial paper to fund the recently announced acquisition of Weidenhammer, S&P said.

The proposed acquisition modestly adds to Sonoco’s diversity and slightly improves it profitability, the agency said.

The ratings also consider its strong business risk profile and intermediate financial risk profile, S&P said.

S&P rates Valmont notes BBB+

Standard & Poor’s said it assigned a BBB+ rating to Valmont Industries Inc.’s proposed $250 million senior notes due 2044 and $250 million senior notes due 2054.

The company will issue the 2044 notes and 2054 notes pursuant to indentures between itself and Wells Fargo Bank NA as trustee, S&P said.

Valmont intends to use a portion of the net proceeds to purchase up to $200 million of its $450 million 6.625% senior notes due 2020 in a partial tender that began Sept. 8.

It will use the remaining proceeds for general corporate purposes, including share repurchases, the agency said.

The BBB+ corporate credit rating reflects continued solid performance across its business segments as well as an expectation that the company will maintain low debt leverage even after making strategic acquisitions and repurchasing shares under a $500 million authorization, S&P said.

Moody’s rates Victory Capital CFR, loans B2

Moody's Investors Service said it assigned a provisional B2 corporate family rating to Victory Capital Holdings, Inc. and provisional B2 ratings to its $25 million senior secured revolving credit facility and $310 million senior secured term loan.

Proceeds will be used primarily to retire existing debt outstanding and to fund the purchase of Munder Capital Management.

Moody’s: Burger King/Tim Hortons loans B1, notes Caa1

Moody's Investors Service said it assigned a provisional B1 rating to 1011778 B.C. Unlimited Liability Co.’s proposed $500 million guaranteed senior secured first-lien revolving credit facility and $6.75 billion guaranteed senior secured first-lien term loan and a provisional Caa1 rating to the company's proposed $2.25 billion guaranteed senior secured second-lien notes.

In addition, the agency assigned 1011778 B.C. a B2 corporate family rating, B2-PD probability of default rating and SGL-1 speculative grade liquidity rating.

The outlook is stable.

The ratings of Burger King Capital Holdings, LLC and Burger King Corp. remain under review for downgrade given the uncertainty as to the ratings of any debt of Burger King Capital and Burger King not tendered and that remains part of the final capital structure.

These ratings were placed under review on Aug. 27 following the announcement that Burger King Worldwide Inc., the publicly traded parent company of Burger King Capital and Burger King, entered into a definitive agreement to acquire Tim Hortons, Inc. for about $12 billion. The transaction is expected to close in late 2014 or early 2015, subject to Tim Horton's shareholder approval and various regulatory reviews in the U.S. and Canada.

Proceeds from the proposed facilities and notes, along with roughly $3 billion of 9% cumulative perpetual series A preferred stock and $3.4 billion of new common equity and cash on hand, will be used to fund the acquisition of Tim Hortons and refinance the outstanding debt at Burger King.

Moody’s gives Capstone loans B2, Caa2

Moody's Investors Service said it assigned Capstone Logistics Acquisition, Inc. a B3 corporate family rating, B2 first-lien senior secured rating and Caa2 second-lien senior secured rating.

The outlook is stable.

The ratings were assigned in connection with the arrangement of new credit facilities, comprising a $182.5 million term loan and a $30 million revolving credit facility, both secured by a first lien on all of the company's assets and a $65 million credit facility secured by a second lien on all assets.

The company will distribute the proceeds of the term loans to its private equity fund owner, Jordan Co. LP, which recently acquired Capstone in an all-cash transaction.

S&P: Capstone loans B, CCC+

Standard & Poor’s said it assigned a B corporate credit rating to Capstone Logistics Acquisition Inc.

The agency also said it assigned a B rating and 4 recovery rating to the company’s $182.5 million senior secured first-lien term loan and $30 million senior secured first-lien revolving credit facility.

The 4 recovery rating indicates 30% to 50% expected default recovery.

S&P also said it assigned a CCC+ rating and 6 recovery rating to the $65 million senior secured second-lien term loan. The 6 recovery rating indicates 0 to 10% expected default recovery.

The outlook is stable.

The ratings reflect the company’s limited scale and scope in the very fragmented and competitive logistics industry and its high debt leverage, S&P said.

Offsetting these risks are the company’s favorable cash flow characteristics and fairly flexible cost structure, the agency said.

Moody’s gives CBS Outdoor notes B1

Moody's Investors Service said it assigned CBS Outdoor Americas Capital LLC's proposed $450 million senior note offering a B1 rating.

The rating on the existing $400 million senior note due 2022 that is expected to be upsized to $500 million is unchanged at B1. All other ratings, including the Ba3 corporate family rating, will remain unchanged.

The outlook is stable.

The $450 million new senior note, $100 million upsize of the senior note due 2022, a draw on the revolving credit facility and cash from the balance sheet will be used to fund the purchase of outdoor assets from Van Wagner Communications for $690 million and pay transaction related expenses.

The debt funded acquisition increases leverage levels to 5.5 times from 4.9 times including Moody's standard adjustments or to 5 times from 4 times excluding Moody's standard adjustments. While the increase in leverage positions the company at the high end of the range for the existing Ba3 corporate family rating, the agency expects leverage to decline over the next two years through EBITDA growth and debt repayment that would more comfortably position the company within the existing rating.

Moody’s drops Elli Investments

Moody's Investors Service said it downgraded the corporate family and probability of default ratings of Elli Investments Ltd. (Four Seasons Health Care) to B3 and B3-PD from B2 and B2-PD, respectively.

At the same time, the agency downgraded the rating of the super senior revolving credit facility to Ba3 from Ba2 and the rating of the senior secured notes to B2 from B1; both of these instruments are borrowed at Elli Finance (UK) plc. Elli Investments’ unsecured notes were downgraded to Caa2 from Caa1.

The outlook is negative.

In addition, Moody's corrected the issuer ratings for the £350 million 8¾% senior secured notes due 2019 and £40 million revolving credit facility to Elli Finance (UK) plc. Due to an internal administrative error, the notes and revolving credit facility were rated on June 12, 2012 under Elli Investments, the guarantor. The ratings are not affected by this correction.

Moody’s said the action largely reflects the recent deterioration in earnings in the first half of 2014 over 2013, and the expectation that the full year earnings will fall significantly short of 2013 as well. The company's reported EBITDA was at £33.4 million in the first half of 2014, compared with £48.2 million in the same period in 2013.

Moody’s assigns GameStop CFR, notes Ba1

Moody's Investors Service said it assigned new ratings to GameStop Corp., including Ba1 corporate family and Ba1-PD probability of default ratings, a Ba1 rating on the proposed new $250 million senior unsecured notes and an SGL-1 speculative grade liquidity rating.

The outlook is stable.

Moody’s said the Ba1 rating reflects the strength in GameStop's credit metrics, leading market position and unique business model. The rating also reflects the company's moderate scale, international footprint and very good liquidity.

The rating is constrained over the medium- to long-term due to the niche market's vulnerability to product renewal cycles and new technology trends. In addition, the rating is also constrained by the risk of over-expansion in the highly fragmented mobile and consumer electronics market, the agency said.

Moody’s gives Micro Focus CFR, loans B1

Moody's Investors Service said it assigned a B1 corporate family rating and a B1-PD probability of default rating to Micro Focus International plc.

The agency also assigned provisional B1 instrument ratings to the planned $1.85 billion term loans, consisting of a $1.35 billion tranche B term loan and $500 million tranche C term loan (LGD3-49%) and the $150 million revolving credit facility (LGD3-49%) issued by MA FinanceCo., LLC.

The outlooks are stable.

Micro Focus announced its intention to merge with Attachmate Group, Inc. (rated B2/negative) in a transaction in which Attachmate will be reversed into Micro Focus. Moody's expect the combined entity to generate a turnover of around $1.3 billion with an expected EBITDA margin of in the high 30%’s.

Moody’s said the B1 corporate family rating is supported by (a) the merged company's broad product portfolio of infrastructure software with satisfactory market positions in most of its markets, many of which are fragmented; (b) a broad customer diversification by industry and geography (legacy Micro Focus has more than 11,000 customers and legacy Attachmate over 23,000 customers); (c) the companies' relatively stable business with high visibility and recurring revenue of 70% for the combined entity; as well as (d) high operating margins and solid free cash flow generation capability.

S&P: Micro Focus loans BB-

Standard & Poor’s said it assigned a preliminary BB- long-term corporate credit rating to Micro Focus International plc.

The outlook is stable.

S&P also said it assigned a preliminary BB- rating to the company’s proposed $2 billion senior secured term loans, including an undrawn revolving credit facility.

The recovery rating is 3, indicating 50% to 70% expected default recovery. The assignment follows news that Micro Focus plans to merge with Attachmate Corp.

The proposed senior secured term loans and revolver will be part of the transaction, S&P said.

The preliminary rating reflects the company’s fair business risk profile and significant financial risk profile, the agency said.

The ratings are constrained by the combined group’s narrow revenue base, limited growth prospects and severe competition from much larger players, S&P said.

These weaknesses are partly offset by the group’s solid profitability, the agency said.

S&P: Zebra loan BB+, notes B

Standard & Poor’s said it assigned a BB- corporate credit rating to Zebra Technologies Corp.

The agency also said it assigned a BB+ rating with a recovery rating of 1 to the company’s proposed $2 billion senior secured term loan due 2021 and $250 million revolving credit facility due 2019. The 1 recovery rating indicates 90% to 100% expected default recovery.

S&P also said it assigned a B rating to the company’s proposed $1.25 billion senior unsecured notes due 2022. The 6 recovery rating indicates 0% to 10% expected default recovery.

The outlook is stable.

The ratings consider the company’s inconsistent operating performance and near-term integration risk, partially offset by the good track record of the legacy Zebra business and the leading market positions of the combined company, S&P said.

The ratings also reflect a view that leverage is likely to fall to less than 5x during 2015 as the company realizes cost savings and repays debt, the agency said.

S&P: PennantPark notes BBB-

Standard & Poor’s said it assigned a BBB- rating on PennantPark Investment Corp.’s $250 million senior unsecured notes due in October 2019.

The company’s long-term issuer credit rating is BBB- and the outlook is stable.

Management expects to use the majority of the proceeds to pay down its revolving credit facilities.

Following this transaction, the agency said it expects total debt to remain static on a pro forma basis with debt-to-reported equity expected to be 0.64x, the agency said.

S&P also said it views the increased diversification of the company’s funding profile as a credit positive.

On the other hand, rating weaknesses predominately stem from PennantPark’s lower position in the capital structure relative to its rated peers, the agency said.

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