S&P upgrades Play, facilities, notes

S&P said it raised the long-term corporate credit ratings on Play Communications SA (formerly Play Holdings 2 Sarl) and Impera Holdings SA (formerly Play Topco SA) to BB from B+. The outlook is stable.

The agency also upgraded the issue rating on Play's senior secured facilities to BB from B+ and the issue rating on the existing payment-in-kind (PIK) toggle notes to B+ from B-. Upon the completion of the IPO and the subsequent full repayment of the PIK toggle notes, it will withdraw the issue ratings on those notes.

S&P said the action primarily reflects its expectation that the group's leverage will fall significantly following the completion of its IPO and subsequent repayment of the €500 million PIK toggle notes issued in March 2017 by Impera.

“In addition, we expect that leverage will continue to fall in 2018 as a result of revenue and EBITDA growth, and free cash flow generation,” the agency said in a news release.

“As a result, S&P Global Ratings' adjusted debt-to-EBITDA is expected to decrease to significantly below 4x in 2017 and a little over 3x in 2018 (from 3.9x at year-end 2016). We also expect a meaningful improvement in free operating cash flow generation, supported by the lower cash interest payments that will follow the reduction in debt.”

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