S&P Rates Negative on Eutelsat

LONDON -- Standard & Poor's Ratings Services said today it placed its 'BBB+' long-term corporate credit and senior unsecured bank loan ratings on France-based leading satellite capacity provider Eutelsat S.A. on CreditWatch with negative implications, following reports that the company will likely undergo a leveraged recapitalization. The 'A-2' short-term corporate credit rating was also placed on CreditWatch with negative implications.

"The probable increase in leverage, including dividend-type payments to shareholders, is outside Standard & Poor's expectations for the ratings and would mark a switch to a highly leveraged financial structure from the sound capitalization currently in place," said Standard & Poor's credit analyst Michael O'Brien.

"The crystallization of a scenario involving substantially higher leverage would most likely result in the ratings being lowered to below investment-grade level," added Mr. O'Brien. "The magnitude of any downward rating action would be dictated by the increase in Eutelsat's debt and the structuring of the transaction."

The CreditWatch placement will likely be resolved once a final decision has been made relating to the potential transaction.

Standard & Poor’s