Ventia Pty Ltd.

The stable outlook reflects our expectation that Ventia will successfully integrate the Broadspectrum acquisition and maintain its solid market position and operating performance. Our classification of Ventia as a financial sponsor-controlled company caps our financial risk assessment, with the recent debt-funded acquisition of Broadspectrum indicating an aggressive financial risk appetite. We expect the company to operate with adjusted debt to EBITDA of less than 5x. Our calculations for Ventia's adjusted debt to EBITDA don't deduct accessible cash and liquid investments from debt given that the company is partly owned by a financial sponsor. We expect Ventia to remain as a moderately strategic joint venture to CIMIC Group. A downgrade could occur due to adjusted debt to EBITDA increasing above 5x,

...Ventia Pty Ltd.'s business risk profile is underpinned by its exposure to the telecommunications sector in Australia and New Zealand. Ventia also has a solid position within the outsourced O&M market, covering a broad range of services. These include motorway and tunnel services, road networks, environmental remediation, water utilities, electricity distribution networks, and social infrastructure. We believe Ventia's acquisition of Broadspectrum Pty Ltd. is a good strategic fit. In our view, the acquisition should modestly strengthen Ventia's business profile by providing access to new sectors, broadening capabilities and service offerings. We view Broadspectrum as having a solid position in facilities management. In our opinion, Ventia has demonstrated an appetite for sizable debt-funded acquisition and large shareholder returns. Credit metrics have significantly weakened, with adjusted debt to EBITDA increasing to about 4.8x in the year ending Dec. 31, 2019, compared with about 4x since...

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