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S&P rates Unity Media notes B
Standard & Poor's said it affirmed Unity Media Management GmbH's B long-term corporate credit rating and parent company Unity Media GmbH's CCC+ subordinated debt rating and removed the ratings from CreditWatch following the group's announced investment in the rights for the German football league, the Bundesliga. The outlook is positive.
At the same time, S&P assigned a B long-term corporate credit rating to Unity Media and related entity iesy Hessen GmbH & Co. KG and a B long-term rating with a recovery rating of 2 to iesy's proposed €1.35 billion senior secured floating-rate notes.
The ratings on Unity Media were placed on CreditWatch on Aug. 2, 2005, following the group's announcement that it was to merge with German competitor Tele Columbus AG & Co. KG (B/positive). Pro forma for current refinancing, Unity Media had total debt of €2.4 billion at Dec. 31, including €500 million at Tele Columbus.
S&P said the affirmation reflects its expectations of sound underlying performance for Unity Media's core cable businesses, particularly following the merger with Tele Columbus, and anticipates that the uptake and delivery of Bundesliga products following the acquiring of license rights is at least sufficient to avoid significant consolidated cash outflows from 2007.
The ratings on Unity Media are constrained by the high leverage and expectations of substantial cash outflows in the current year, together with significant operational risks as Unity's Bundesliga business is set up, the agency said. Lease-adjusted total debt to EBITDA is expected to be in excess of 6.5x while funds from operations to total debt is likely to remain less than 10%.
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