Fitch: No Rating Impact on Voyage from Shareholding Change

Wed Aug 13, 2014 11:58am EDT

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(The following statement was released by the rating agency) LONDON, August 13 (Fitch) Fitch Ratings says the acquisition of Voyage Holdings Limited's (Voyage) by Partners Group and Duke Street from HgCapital has no impact on Voyage's ratings. This is because the debt levels of the restricted group are unaffected by the shareholding change. The acquisition price of the transaction is GBP375m. Voyage is rated at Issuer Default Rating (IDR) 'B' with Stable Outlook, while at its subsidiary, Voyage Care BondCo plc's senior secured notes are rated 'BB'/'RR1' and second lien notes 'CCC+'/ 'RR6'. As part of this transaction, the existing debt structure comprising a GBP30m revolving credit facility (RCF), GBP222m senior secured notes and GBP50m second lien notes is intended to remain in place. To this effect, the issuer of the notes, VoyageBondCo plc has launched a consent solicitation with the noteholders seeking a waiver of the requirement for the issuer to offer to repurchase the notes if the transaction proceeds, and also an amendment of the indentures to deem each of Partners Group and Duke Street and their respective affiliates permitted holders. . The change in ownership will not result in fresh equity injection into the group at completion. As part of the transaction, the existing loan notes, which amounted to about GBP400m as of the financial year to March 2014, will remain in place but will be reduced to GBP110m after the transaction. Fitch continues to exclude these instruments from the calculation of its leverage metrics due to their equity-like features. Voyage's ratings continue to reflect its leading market position as the independent provider of care to people with learning disability. They also take into account on-going pressure on its EBITDA margins from limited fee inflation and rising costs reflected in the high funds from operations (FFO) lease-adjusted gross leverage at FYE14 of 7.1x (6.7x adjusted for lower lease costs and bolt-on acquisitions in FY14). While leverage is tight for the 'B' rating, its FFO fixed charge cover at 1.8x (1.9x pro-forma) remains consistent with the rating. We expect improvement in Voyage's operating performance and cost control to result in gradual deleveraging from FY15. The new ownership will not result in any change to the current strategy or financial policy of the group. Contact: Garima Gupta Analyst +44 20 3530 1463 Fitch Ratings Limited 30 North Colonnade London E14 5GN Pablo Mazzini Senior Director +44 20 3530 1021 Paula Murphy Director +44 20 3530 1718 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. Additional information is available on www.fitchratings.com Related Research: Fitch Affirms Voyage Holding Limited at 'B'; Outlook Stable Applicable Criteria and Related Research: Treatment of Junior Corporate Debt in Europe here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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