Moody's gives Patagonia, loans, notes B1

Moody's Investors Service said it gave a B1 corporate family rating to Patagonia Holdco LLC and B1 ratings to its planned senior secured facilities, to include an $800 million first-lien term loan due in 2029, a $200 million senior secured first-lien revolving credit facility due 2027 and $500 million of senior secured notes due 2029.

Stonepeak Partners LP plans to buy Lumen Technologies Inc.’s Latin American business for an enterprise value of $2.7 billion. Stonepeak set up Patagonia to be the holding company for the business.

“The B1 CFR considers Patagonia's relevant position in the Latin American market as a pan-regional independent fiber network provider, connecting 12 countries across the region. The company operates a majority owned, extensive and integrated network comprised of strategic backbone fiber, subsea assets and data center infrastructure, which differentiates it from other regional competitors,” Moody’s said in a press release.

However, “The rating is constrained by Patagonia’s relatively small revenue scale, when compared to rated international peers and weaker FFO margin than Moody's expects for a B-rated company, of about 28% as of December 2021. In addition, the rating incorporates the execution risk owing to transitioning to a standalone operation and implementing the new business strategy,” the agency noted.

Stonepeak will use the term loan, the note proceeds and an equity investment to acquire the business.

The outlook is stable.

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