Ratings agency Fitch has assigned a final BB/RR1 rating to Hong Kong-based Pacnet’s US$350m of senior secured guaranteed notes due 2018.
The data centre and undersea cable operator is expected to use proceeds from the completed issue and a new term…
Ratings agency Fitch has assigned a final BB/RR1 rating to Hong Kong-based Pacnet’s US$350m of senior secured guaranteed notes due 2018.
The data centre and undersea cable operator is expected to use proceeds from the completed issue and a new term loan to refinance US$300m worth of senior secured guaranteed notes, term loans and vendor financing.
Fitch’s final rating is in line with the expected rating first assigned in June 2013 and restated in November prior to the remarketing of the bonds. The RR1 recovery rating reflects the agency’s estimation that at least 90% of the notes will be recovered.
The notes are subordinated to any future debt raised at non-guarantor subsidiaries but Fitch said it understands the company has no plans in this respect.
The agency added that the rating reflects Pacnet’s relatively small scale in key markets, low profitability and strong competition from better-capitalised rivals. The company’s “weak” financial position and risky data centre strategy were also taken into account, it noted.
However, Fitch pointed out that Pacnet’s restructuring in late 2012 has enabled it to refocus on core businesses and streamline its cost structure.
Pactnet reported adjusted EBITDA of US$82m for the first nine months of 2013, up 28% year-on-year.
In Hong Kong, Pacnet competes against mobile operators China Mobile Hong Kong, 3, CSL, PCCW and SmarTone, as well as fixed-line services providers PCCW-HKT and City Telecom, among several others.
Pacnet was not immediately available for comment.
