S&P: Jerrold Holdings Ltd. 'BB-' Rating Placed On CreditWatch Negative On Proposed Buyout Of Minority Shareholders
At the same time, we placed the 'BB-' issue rating on Jerrold Finco PLC's senior secured notes on CreditWatch with negative implications.
Together announced on Sept. 15, 2016 that its majority shareholder intends to undertake a debt-financed buyout of its two private equity investors, Equistone and Standard Life, which have been shareholders since 2006 and jointly hold 30% of voting rights. The group expects the debt to be issued from a new intermediate holding company, which will sit above Jerrold Holdings Ltd. in the legal structure. If the transaction proceeds, we note that the Moser family will own all of the company excluding a continued small non-voting stake held by other members of the senior management team.
The CreditWatch reflects our view that if the transaction proceeds, Together's very strong capital position could weaken, with the consolidated risk-adjusted capital ratio potentially falling below the 15% threshold in our criteria. However, we expect that the ratio should remain above 10%, reflecting the high starting point. We also believe that Together will continue to generate capital through retained earnings. Therefore, on resolution of the CreditWatch, we expect any downgrade will likely be limited to one notch.