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S&P rates Virgin Media loans, notes BB-
S&P said it assigned BB- ratings to Virgin Media Inc.’s planned £5.7 billion equivalent of senior secured loans and notes as part of its merger with Telefonica U.K. The agency also assigned a 3 recovery rating.
Proceeds will be distributed as dividends to joint venture owners Liberty Global plc and Telefonica SA once the merger closes.
Telefonica U.K. comes to the deal debt-free. S&P said that after considering the dividend recap, Virgin Media’s pro forma 2020 leverage would be about 5x for the combined company versus 6x for Virgin Media alone.
“The proposed merger enhances VMED’s competitive position but is not transformational for our view of business risk. VMED will benefit from a significant increase in scale, as revenues for the combined entity should increase to almost £11 billion in 2020 from £5.2 billion in 2019, and EBITDA will almost double,” S&P said in a press release.
The agency said it affirmed Virgin Media’s ratings, and the outlook remains stable.
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