Moody's rates Waste Italia notes B2

Moody's Investors Service said it assigned a provisional B2 corporate family rating to Waste Italia SpA and a provisional B2 rating to its proposed €200 million senior secured notes due 2019. The outlook is stable.

The proceeds of the notes, together with a €44.5 million capital contribution from Waste Italia's parent, Kinexia SpA, will be used to repay existing senior debt and intergroup loans, to fund the acquisition of Geotea SpA and to fund acquisitions from Kinexia. The remaining proceeds, about €10 million, will be used for general corporate purposes.

The agency said Waste Italia's provisional B2 corporate family rating reflects its vertically integrated business model, high margins on landfill disposal, large remaining landfill capacity compared to local competitors following planned acquisitions and high customer retention rates.

The rating also takes into account the company's limited scale and geographical diversification, uncertainty associated with maintaining future landfill capacity, potential margin dilution as the group expands into other sectors within waste management and a cyclical industry dependent on the Italian economy, Moody’s said.

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