Lorca Holdco Limited: Update to credit analysis

Lorca Holdco Limited: Update following upgrade to Ba3, outlook positive - Credit Opinion – 2024/03/20 – US$ 250.00 – ...Lorca Holdco Limited ("Lorca" or "Masmovil", Ba3 positive) is the parent company of the joint venture (JV) between Masmovil and Orange (Baa1 positive) in Spain. On 15 March, we upgraded Lorca's rating to Ba3 from B2. The upgrade to Ba3 balances the enhanced business profile, scale and market position of the combined entity with the JV's high initial leverage of around 5.3x. However, we expect credit metrics to significantly improve overtime with leverage trending towards 4.0x, supported by the strength of the combined business and management's solid track record of execution. The rating reflects: (1) the JV's large scale and position as a fully converged fixed and mobile communications operator in Spain; (2) the good quality of the JV's fixed and mobile combined networks; (3) the moderate but reasonable cost and capital expenditure synergies; (4) the strong track record of both management teams in the execution of past acquisitions, integrations and synergy achievements of existing businesses;...

Lorca Holdco Limited - LGD Assessment – 2023/01/12 – US$ 750.00

Lorca Holdco Limited: Update following initiation of review for upgrade - Credit Opinion – 2022/10/13 – US$ 250.00 – ...Lorca Holdco Limited (Lorca or Group Masmovil) is the parent company of Masmovil Ibercom, S.A. (Masmovil). On September 30, 2022, we placed Lorca's rating under review for upgrade following the announcement that Orange (Baa1 stable) and Group Masmovil have reached an agreement to merge their businesses in Spain in a 50:50 joint venture (JV). The review will focus on the successful completion of the transaction under the terms publicly announced; the assessment of the business and financial profile of the combined entity, including the deleveraging profile suggested by the announced leverage target; the strategic priorities that the JV owners may want to implement; the assessment of the impact on the JV's credit profile of the potential remedies that may be required to achieve the regulatory approval of the deal; and the JV's final debt structure. Its B2 corporate family rating (CFR) reflects the quality of the company's management and the successful execution of its strategy in Spain; consistent...

LGD Assessment Masmovil - LGD Assessment – 2021/10/20 – US$ 750.00

Lorca Holdco Limited: Update following downgrade to B2 - Credit Opinion – 2021/10/11 – US$ 250.00 – ...Lorca Holdco Limited (Lorca) is the parent company of Masmovil Ibercom, S.A.'s (Masmovil). Its B2 CFR reflects the significant increase in leverage following the acquisition of Euskaltel, S.A. (Euskaltel, B1 under review for downgrade). Prior to this transaction, the rating was already weakly positioned at the B1 level. The B2 rating reflects the quality of the company's management and the successful execution of its strategy in Spain; its smart non-disruptive price strategy; consistent revenue growth; and cost-cutting because of operating efficiencies, synergies and smart agreements to display the use of networks, which underpins EBITDA margin approaching 39.5% in 2021. The rating also reflects the group's high leverage of more than 6x following the acquisition of Euskaltel; significant reliance on wholesale agreements resulting from the hybrid (owned, co-shared and access to third-party infrastructure) network business model; weak convergent fixed-mobile strategy; exposure to a difficult...

Lorca Holdco Limited: Update following proposed acquisition of Euskaltel - Credit Opinion – 2021/04/07 – US$ 250.00 – ...Lorca Holdco Limited's (Lorca) B1 corporate family rating (CFR) was placed on review for downgrade following the announcement that Masmovil Ibercom, S.A. (Masmovil) had launched a takeover bid to acquire Euskaltel, S.A. (Euskaltel, B1 review for downgrade) for 2 billion in an all-cash offer. The debt-financed acquisition of Euskaltel will likely result in temporarily weaker-than- expected credit metrics including leverage peaking at more than 6x, based on preliminary calculations before synergies and disposals. The company had previously grown rapidly through M&A although with higher integration and execution risks. Before this transaction, Masmovil's rating was already weakly positioned at B1. Nevertheless, Masmovil will benefit from an increase in scale and a further strengthening in its market position and resilience, which may offset the weaker credit metrics. The review will focus on the financing of the transaction, the strategy of the combined group and the potential for synergies,...