S&P applies B+ to New Co.

S&P said it assigned its B+ preliminary long-term corporate credit rating to New Co. The outlook is developing.

The preliminary rating mirrors that on the company's 100% owner, Areva.

As part of the reorganization of its activities, Areva intends to transfer all its outstanding unsecured bonds totaling €4.8 billion (excluding €1 billion to be repaid in September 2016) to New Co. Areva will retain the bank debt – a €2 billion syndicated facility and a short-term €1.2 billion undrawn credit facility – except for €600 million of debt at Areva NC, which is attributed to New Co.

S&P said it believes New Co.'s business risk profile shows stronger credit characteristics than Areva's and assess it as satisfactory versus fair for the Areva group.

However, New Co.'s initial leverage will be very high, with future viability of its capital structure dependent on the planned capital increase. Like its parent, New Co. is, in the agency’s view, a government-related entity (GRE) with an important role for and strong link with the French government, even though the state's direct and indirect shareholding in the group may be only about 67% after the capital increase.

With respect to New Co.'s own status as a GRE, S&P said it does not anticipate that the high likelihood of extraordinary support from the French government, which results in a three-notch uplift to New Co.'s stand-alone credit profile, will reduce after the capital increase.

© 2015 Prospect News.
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