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Global Credit Research - 14 Jul 2010
Johannesburg, July 14, 2010 -- Moody's Investors Service has today assigned a Baa3 rating to the
proposed benchmark sized long-term senior unsecured notes to be
issued by Myriad International Holdings B.V. ("MIH"),
which is irrevocably and unconditionally guaranteed by its 100%
parent company, Naspers Limited ("Naspers").
Moody's has today also assigned a Baa3 issuer rating to Naspers.
This is the first time that Moody's has rated Naspers or MIH.
The rating outlook is stable.
The new guaranteed notes are senior unsecured obligations and will rank
equally (pari-passu) with all other existing and future unsecured
and unsubordinated debt obligations of the company, including the
company's revolving credit facilities. Proceeds from the
bond issuance will be used to repay borrowings under the company's
revolving credit facility, as well as for general corporate purposes.
The Baa3 rating of the proposed notes assumes that the final transaction
documents will not be materially different from draft legal documentation
reviewed by Moody's to date and that these agreements are legally valid,
binding and enforceable.
"The Baa3 rating reflects Naspers' leading market positions
across a range of diversified media subsectors that are at different stages
of maturity and in a variety of geographies," explained Moody's
Vice-President Senior Analyst, Soummo Mukherjee. "The
rating also takes into account the company's strong operating and
financial performance, sustainable cash flow generation profile
and good growth prospects," added Mukherjee.
Furthermore, Moody's recognises Naspers' robust performance
in the pay-TV business, with profitable growth in subscribers
given the current low market penetration and the improved affordability
of entertainment packages. The company also has limited exposure
to the more cyclical advertising-related revenues, a track
record of consistent strategy execution and conservative financial policies
that include low leverage and a strong liquidity profile, as well
as a disciplined approach to acquisitions. Moreover, the
rating is enhanced by the financial flexibility provided by Naspers'
valuable holdings in publicly quoted entities such as Tencent, whose
growing dividend stream is a source of additional cash flow to support
future group investment requirements.
However, the Baa3 rating also takes into account the group's
position as an emerging markets operator, and its susceptibility
to political and economic instability, or regulatory and currency
fluctuation risks. Naspers' rating is constrained by its
complex organisational structure as debt service is predominantly reliant
on cash flows generated by entities (South African pay-TV,
internet and print) that have minority shareholders.
Naspers' liquidity is comfortable based on its cash and cash-equivalent
balance of ZAR5.8 billion and the availability of approximately
ZAR770 million under its current credit facilities at the end of FYE March
2010. Following the successful placement of the proposed notes
and the repayment of intended borrowings under the existing credit facilities,
Naspers will have an even more robust liquidity profile and comfortable
debt maturity profile. This will be supported by Naspers'
USD1.6 billion forward-start multi-currency facility,
which will commence in March 2011 and mature in March 2013 and whose purpose
is to refinance the company's two existing credit facilities that
mature in March 2011.
The current Baa3 rating for Naspers allows for some headroom for bolt-on,
partly debt-financed acquisition investments that the group may
make in the context of its growth strategy.
The stable outlook reflects Moody's expectation that the company
will maintain its leadership positions in the media subsectors in which
it operates, deliver solid operating and financial performance and
continue to apply prudent financial policies.
Negative pressure on the rating could develop if (i) Adjusted Debt/EBITDA
sustainably exceeds 3.0x and RCF/Debt (Retained Cash Flow to Total
Adjusted Debt) decreases below 10%, as a result of a deterioration
in business risk profile, operational underperformance or material
debt-financed acquisitions; or (ii) if the value of Naspers'
stake in Tencent (or similar associate investments) weakens or derive
a growing dividend stream becomes questionable. All credit metrics
are based on Moody's standard definitions and analytic adjustments.
On the other hand, upward pressure in Naspers' rating or outlook
could result from the build-up of a longer track record as a rated
entity of demonstrable financial discipline in light of its growth strategy
in emerging markets and continued resilient operating performance and
free cash flow generation.
The principal methodology used in rating Naspers was "Moody's Global
Diversified Media Industry Rating Methodology", which was
published in November 2007 and is available on www.moodys.com
in the Rating Methodologies sub-directory under the Research &
Ratings tab. Other methodologies and factors that may have been
considered in the process of rating this issuer can also be found in the
Rating Methodologies sub-directory on Moody's website.
Based in Cape Town, South Africa, Naspers Limited (Naspers)
is a diversified media company with a core focus on pay-TV,
print media, e-commerce and internet activities. By
geography, the group's main operations are located in South
Africa, with a growing presence across Sub-Saharan Africa,
Central and Eastern Europe and other emerging markets like Brazil,
Russia, India or China. Incorporated in 1915, Naspers
has a near 100-year history in the media industry and has recently
expanded its focus to gradually bridge the gap between traditional and
new media platforms. Naspers reported ZAR28 billion in revenues
and ZAR6.5 billion in EBITDA for FYE March 2010.
Vice President - Senior Analyst
Corporate Finance Group
Moody's America Latina Ltda.
David G. Staples
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's assigns Baa3 to Naspers' proposed notes (South Africa)
No Related Data.
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