(September 1) – Moody’s Investors Service is downgrading its debt ratings for Quebecor Printing Inc. and upgrading them for its recent acquisition, World Color Press.
It has also given a Baa2 rating to QPI’s existing US$1.0 billion and new US$1.25 billion unsecured bank credit facilities.
These revisions come after a review Moodys initiated on July 12. It says the new company is competitively stronger and better balanced across its combined businesses, but that for the deal to work, it must realize the imagined cost savings and economies of scale.
Along with these uncertainties the combined firms also face higher leverage with US$1.35 billion to US$1.5 billion. That will have to be repaid or refinanced within three years. The firm’s balance sheet will be weaker due to large increases in debt and goodwill.
Moody’s says it expects management to focus on debt reduction, but it cautions that cuts in capital spending could hurt its long-term earnings prospects.
-IE Staff
For more please see:
www.moodys.com