Moody’s could raise Tele Pizza

Moody's Investors Service said it placed the B2 corporate family rating and the B3-PD probability of default rating of Tele Pizza SAU on review for upgrade.

The B2 ratings on the €285 million senior facility B and €10 million revolving credit facility remain unchanged on the expectation that these facilities will be repaid from the IPO proceeds.

Moody’s said the action follows Tele Pizza's definitive IPO filing on the Spanish Stock Market and the publication of the IPO prospectus on April 15.

Tele Pizza plans to raise gross proceeds of €118.5 million from the issuance of new ordinary shares. The company also announced it arranged on April 8 new bank credit facilities with a pool of 10 banks, which include an amortizing term loan of around €200 million and a revolving credit facility of €15 million. Most of the IPO proceeds from the new ordinary shares will, in addition to the new bank credit facilities, be applied toward debt redemption and refinancing of the existing debt.

The execution of the IPO as proposed will lead to a material reduction in debt. Based on Moody's preliminary assessment, after the IPO the Moody's adjusted leverage will decrease to around 4.2 times from 5.2 times as of year-end 2015, a level commensurate with a higher corporate family rating than B2.

The agency anticipates that the debt reduction and the concurrent refinancing of existing bank credit facilities will provide Telepizza with substantial interest expense savings and a strengthening of free cash flows.

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