Moody's affirms Algeco on upsizing

Moody's Investors Service said it affirmed Algeco Investments BV's B2 corporate family rating.

The agency also affirmed the B2 rating on the proposed upsized €700 million 6½% fixed-rate backed senior secured notes, along with the B2 rating on the proposed upsized €175 million backed senior secured floating-rate notes and the B2 rating for the $520 million 8% backed senior secured fixed-rate notes, all issued by Algeco Global Finance plc.

The rating on the $305 million 10% backed senior unsecured notes issued by Algeco Global Finance 2 plc was affirmed at Caa1.

The outlook is stable.

The ratings follow news that Algeco plans to tap its existing notes for an aggregated €125 million that will largely be used to refinance outstanding amounts under a 12½% funding facility maturing in December. The tap will be split between a €100 million upsizing of the existing €600 million 6½% senior secured fixed-rate notes and a €25 million upsizing of the existing €150 million senior secured floating-rate notes.

The action also considers the Nov. 13 announcement that Algeco has entered into a definitive agreement to sell Target Lodging, its North American remote accommodations business, for a total consideration of $820 million, Moody's said.

The proceeds are divided between $562 million of cash and $258 million of shares in the acquirer, Platinum Eagle Acquisition Corp., a publicly traded special purpose acquisition company, the agency said.

The ratings reflect a view that the tap will have limited impact on gross leverage and a small positive impact on interest expenses, Moody's said.

The ratings also consider that the sale of Target Lodging will leave Algeco with a large liquidity buffer, which mitigates the material increase in gross leverage following the sale, the agency said.

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