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February 22, 2008 |
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C&M CO: Moody's Reviews 'Ba2' Ratings for Possible Downgrade Moody's Investors Service, on Feb. 21, 2008, placed on review for possible downgrade the Ba2 corporate family rating of C&M Co. Ltd. and the Ba2 senior unsecured bond rating of C&M Finance Ltd, which is guaranteed by C&M. "The review has been prompted by the announcement that the Ministry of Communications and Information as well as the Korea Broadcasting Authority have approved the takeover of C&M by a consortium of financial and strategic investors led by MBK Partners and Macquarie Korean Opportunities Fund," says Laura Acres, a Moody's Vice President. Moody's is concerned that the new shareholders will potentially leverage up C&M to part fund the acquisition cost and that there may be a potential change in the company's future business strategy, which together will negatively impact C&M's credit profile. Moody's also notes that the change of control clause in the bond indenture will be triggered if 35% of the total voting power changes hands and a rating decline occurs. As advised by the company, the new shareholders have put in place standby facilities to redeem the bonds if necessary. "The review will evaluate the longer term intentions of the new shareholders, particularly with regard to financial polices and business strategy of C&M. The rating would potentially result in more than one notch downgrade if C&M's financial leverage increased materially," adds Acres, also Moody's Lead Analyst for the company. Founded in 2000 by Min Joo Lee, C&M is the major cable-TV operator in the Seoul/Kyunggi region. It is the monopoly provider in 8 of its 15 regions and holds a duopoly status in the remaining seven. C&M provides cable-TV services to approximately 2 million subscribers as well as high-speed data services to 422,000 subscribers. |
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