MUMBAI (Thomson Financial) - Fitch Ratings said it has placed its 'B+'/'RR4'
ratings on Virgin Media Finance Plc.'s senior unsecured notes on positive watch,
following the the company's proposed issue of convertible notes and
corresponding prepayment of senior debt.
"In effect the proposed refinancing would improve the potential recoveries
for senior noteholders, and therefore could result in an upgrade of the senior
notes of up to two notches, to 'BB'/'RR2' from 'B+'/'RR4'," the agency said.
It also affirmed the telecom provider Virgin Media Inc.'s long-term IDR at
'B+' and short-term IDR at 'B'.
The positive watch on the senior notes is the result of the proposed change
in the capital structure, and is independent of Fitch's view on the issuer
default rating (IDR).
Fitch said the company's intention to issue $1 billion of structurally
subordinated convertible notes and to use the 504 million pounds equivalent
expected proceeds to prepay senior secured debt would not only reduce near-term
amortisation pressure, but also allow an additional potential 504 million pounds
to flow to the senior noteholders in a default scenario.
Fitch expects to resolve the positive watch upon completion of the proposed
convertible notes issue and prepayment of the senior secured facilities as
outlined by the company.
The ratings firm also affirmed Virgin Media Investment Holdings Ltd's 5.3
billion pounds senior secured bank facility at 'BB+'/'RR1'.
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