Moody’s rates Linxens first-lien loan B1

Moody's Investors Service said it affirmed Financiere Lully C's (Linxens) B2 corporate family rating and B2-PD probability of default rating.

The agency also said it affirmed the B1 instrument rating on the first-lien term loan B-1, first-lien term loan B-2 and the upsized €125 million revolving credit facility and the Caa1 instrument rating on the second-lien term loan B-1 and second-lien term loan B-2.

Moody’s also said it assigned a B1 instrument rating to the new €240 million first-lien term loan B-4 to be raised by Lully Finance Sarl.

The outlook is stable.

On Nov. 3, Linxens entered into an agreement to acquire a division of Smartrac NV (Seven) for an undisclosed sum, Moody’s explained.

As part of this transaction, which is expected to close before the end of the year, Linxens will raise a new €240 million first-lien senior secured term loan, the proceeds of which along with a €110 million equity injection from its shareholders, will be used to fund the acquisition, pay related transaction fees and expenses and pay down drawings under the revolving credit facility that were made in relation to the financing of the Pretema GmbH acquisition in August 2016, the agency said.

Moody's also noted that as part of this transaction, Linxens is looking to re-price its euro-denominated first-lien term loan B-2 in line with the new first-lien term loan B-4 and also re-price the second-lien term loan B-2.

The re-pricing is only expected to have a marginal impact on the company's interest coverage ratio and free cash flow, the agency said.

The ratings reflect the company’s enlarged product offering following the acquisition of Seven, increased diversification and an expectation that Linxens will continue generating significant free cash flow used to reduce outstanding debt, Moody’s said.

The ratings are constrained by the company's high adjusted gross leverage ratio at 6.5x projected by the end of 2016 pro forma for the acquisition of Seven, the agency said, along with the limited growth prospects of the SIM card segment due to the relatively higher maturity of the market.

© 2015 Prospect News.
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