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Moody’s assigns Virgin Media O2 Ba3
Moody’s Investors Service said it assigned a Ba3 corporate family rating and a Ba3-PD probability of default rating to VMED O2 UK Ltd. (Virgin Media O2). The new company will be a 50-50 joint venture between Virgin Media Inc. with O2 Holdings Ltd. Telefonica SA will contribute O2 debt-free to the venture, and Liberty Global plc will contribute Virgin Media.
Moody’s also assigned a Ba3 rating to the new £2.45 billion (equivalent) senior secured notes due 2031 (except for the pound-denominated tranche due 2029) to be issued by VMED O2 UK Financing I plc, to the new £1.5 billion term loan A (facility P) due 2026 to be raised by VMED O2 UK Holdco 4 Ltd., and to the £1.75 billion (equivalent) term loan B to be split into a facility Q and a facility R due 2029 to be issued by Virgin Media Bristol LLC and VMED O2 UK Holdco 4 Ltd., respectively, all entities being subsidiaries of VMED O2 UK.
Proceeds will be used to pay dividends to the shareholders.
The Ba3 ratings on VMED O2 reflect the joint venture’s size, the quality of fixed and mobile assets, the cost and capital savings from the merger and its liquidity, Moody’s said.
Moody’s affirmed all the ratings of Virgin Media Inc. and its subsidiaries except for the vendor financing notes raised by Virgin Media VFN IV DAC and Virgin Media Vendor Financing Notes III. Moody’s downgraded the vendor financing notes issued by Virgin Media VFN IV DAC and Virgin Media Vendor Financing Notes III to B2 from B1. “The downgrade of the vendor financing notes reflects the increased amount of senior secured debt ranking ahead pro forma for the closing of the joint venture,” Moody’s said in a press release.
Moody’s changed the outlook on Virgin Media Inc. and its subsidiaries to stable from negative.
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