Singapore, May 08, 2013 -- Moody's Investors Service has assigned a definitive B2 corporate
family rating to iEnergizer Limited.
At the same time, Moody's has assigned a definitive B2 foreign
currency rating to the USD135 million senior secured term loan drawn by
iEnergizer Ltd. (iEnergizer) and Aptara, Inc. (Aptara),
its wholly-owned subsidiary.
The outlook for both ratings is stable and all ratings are affirmed.
RATINGS RATIONALE
Moody's has removed the provisional status of the corporate family
rating and senior secured rating, originally assigned on 25 February
2013. Moody's rating rationale was set out in a press release
issued on that date and explored more fully in a Credit Opinion issued
on 27 February 2013.
The proceeds from the issue of the term loan are being used to refinance
a USD20.0 million shareholder loan and a USD114.5 million
low-cost loan from a third party. These loans were incurred
in the process of acquiring Aptara and were technically repayable on demand.
As a result of this particular liquidity risk, Moody's assigned
a provisional rating to the CFR, in addition to the loan facility,
and the draw down of the six-year, amortising term loan has
now removed this concern.
The term loan is guaranteed by as many subsidiaries as feasible,
including the invoicing entities in Mauritius. Over 90%
of the cash generated is received by parties to the loan.
The stable outlook reflects Moody's expectations that iEnergizer's business
model remains consistent, and that the company will keep an organic
bias to its expansion.
"While we see the attractiveness of iEnegizer's broad offering
in content transformation solutions we nevertheless expect overall adjusted
EBITDA margins to decline slightly over time, towards the low 20%
range, as a result of competitive pressures and additional costs
as the business grows", says Alan Greene, a Moody's
VP-Senior Credit Officer and Lead Analyst for iEnergizer.
Given size and leverage constraints, there is very limited upside
potential for the ratings. But upgrade pressure could evolve over
the longer term if the company maintains overall EBITDA margins above
20%, while improving its relative market share and with revenues
surpassing USD500 million. Credit metrics that could support this
outcome would include i) total debt/EBITDA below 4.0x; or
ii) free cash flow/total debt of around 8% to 10% or better,
on a sustained basis.
On the other hand, the rating could face downward pressure if free
cash flow is adversely impacted by a decline in revenues and rising costs,
or by an overly aggressive acquisitions policy. Such a scenario
could be accompanied by i) total debt/EBITDA exceeding 4.5-5.0x;
ii) free cash flow/total debt falling below 5%; or iii) (EBITDA-capex)/interest
expenses falling below 1.5x to 2.0x, on a sustained
basis.
The principal methodology used in this rating was the Global Business
& Consumer Service Industry Rating Methodology published in October
2010. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Alan Greene
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308
Philipp L. Lotter
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308
Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308
Moody's assigns definitive B2 corporate family rating to iEnergizer