Sunrise’s issuer default rating may be downgraded by several notches after the merger with the UK group is finalized, the rating agency has warned.
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The rating agency Fitch has placed the long-term “BBB-” issuer default rating (IRD) of the operator Sunrise under observation with the possibility of lowering it, after the takeover announced by the British Liberty Global.
Fitch placed the rating under “Rating Watch Negative,” while upholding the “BBB-” long-term debt rating, according to a statement released Friday.
On Wednesday, the Anglo-Saxon owner of UPC Switzerland launched a cash takeover offer on Sunrise valuing the latter at 6.8 billion francs.
Analysts from the rating agency believe that the level of acceptance of the offer set at 90% will be reached to carry out a forced withdrawal of minority interests. The future merged entity is expected to record a multiple of five between net debt and gross operating income (EBITDA), a higher ratio than Sunrise’s current one.
So it’s possible that the IDR rating will experience a downgrade by several notches after the merger is finalized, Fitch warned. If the buyback offer is not successful, this rating should remain at “BBB-”.
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