Moody's rates eircom notes B1

Moody's Investors Service said it assigned a B1 rating to the proposed €400 million to €500 million senior secured notes due 2026 to be issued by eircom Finance Designated Activity Co. (eircom Finance DAC).

Eircom Finance is an indirectly wholly owned subsidiary of eircom Holdings (Ireland) Ltd., Moody's noted.

The agency also said assigned a B1 rating to the proposed €350 million to €450 million senior secured term loan B2 due 2026 to be issued by eircom Finco Sarl.

The agency also said it affirmed eircom's B1 corporate family rating and B1-PD probability of default rating, as well as the existing B1 ratings on the term loan issued by eircom Finco.

The outlook remains stable.

The proceeds from this debt issuance will be used to redeem the €700 million guaranteed senior secured notes due 2022 issued by eircom Finance DAC.

The remainder will be used for operational purposes following the dividend payment just prior to the refinancing, Moody's said.

eircom will make a €300 million dividend payment, partly funded with €60 million of existing cash and a temporary €100 million drawing on its revolving credit facility, the agency said.

The ratings balance eircom's increased leverage following the dividend recapitalization and indications of a more aggressive financial policy by its shareholders with expectations of improving underlying operating performance and cash flow generation, resulting from the company's stronger network quality, Moody's said.

The agency said it believes eircom's operating performance will continue to improve, supported by the company's investment plan, good operational momentum and cost savings.

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