Moody's cuts Auris Luxembourg II

Moody's Investors Service said it downgraded the corporate family rating to B3 from B2 and the probability of default to B3-PD from B2-PD all issued at the level of Auris Luxembourg II SA. Concurrently, Moody's downgraded to B3 from B2 the instrument rating to the senior term loan (split into a €1.963 billion B1 tranche and a $1.235 billion B2 tranche) and downgraded to B3 from B2 the instrument rating to the €260 million senior revolver, all issued at the level of Auris Luxembourg III Sarl. The outlook on all entities remains negative.

Auris Luxembourg II is the entity consolidating the operations of WS Audiology, which was created following the completion of the merger between Sivantos and Widex.

The downgrade reflects the operating underperformance at both Sivantos and Widex since the announcement of the merger and limited merger synergies realized as of September notably because of delays in closing the merger coupled with higher than initially anticipated costs required in order to close the merger and realize the merger synergies. As a result, Moody's adjusted leverage deteriorated to 11.7x as of September from 9.1x as of April 2018 at the announcement of the merger.

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