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4-Traders Homepage  >  Equities  >  Nyse  >  Moody's Corporation    MCO

Delayed Quote. Delayed  - 09/27 03:39:31 pm
108.561 USD   -0.39%
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Announcement: Moody's: Emeco's proposed transaction will constitute a distressed exchange, if implemented

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09/27/2016 | 02:42pm CEST

Release date- 27092016 - Moody's Investors Service says that Emeco Holdings Limited's (Caa1 negative) current proposed transaction is credit negative and will-if implemented-constitute a distressed exchange, which is a default under Moody's definition, of the senior secured notes rated Caa1, issued by its wholly owned subsidiary Emeco Pty Limited.

'IMPORTANT NOTICE: MOODY'S RATINGS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS. SUCH USE WOULD BE RECKLESS AND INAPPROPRIATE. SEE FULL DISCLAIMERS BELOW.'

On 23 September 2016, Emeco signed a binding restructure agreement to carry out a merger with Orionstone Holdings (unrated) and Andy's Earthmovers (unrated), and implement a recapitalization of Emeco.

Under the proposed transaction, Emeco will conduct a debt-for-equity swap of its USD283 million senior secured notes.

At the same time, Orionstone's creditors and Andy's creditors will also take part in a debt-for-equity swap.

Emeco's note holders and the creditors of Orionstone and Andy's will receive a share of 54% of the ordinary shares of the combined group and AUD473 in senior secured notes with a 5-year maturity, thereby extending Emeco's debt maturity profile to 2021 from 2019.

Emeco will also implement a rights issue and refinance its asset backed loan, which matures in December 2017, as a part of the transaction.

'If implemented, the transaction will constitute a distressed debt exchange, which is a default event under Moody's definition, given our assessment of the resulting high economic loss when compared to the original payment promise for the notes,' says Saranga Ranasinghe, a Moody's Assistant Vice President and Analyst.

Moody's recognizes that the completion of the transaction will provide the combined entity with significant synergies, increased fleet capabilities and capital expenditure savings. However, in view of the still challenging conditions faced by these equipment rental companies and increased debt levels, although with higher earnings, Moody's considers that the risk of default remains high.

The company expects the transaction to take place in December 2016. The transaction is conditional on the approval of Emeco's note holders through a creditor's scheme.

The creditor's scheme requires approval by more than 50% in number and more than 75% in face value of the note holders.

Moody's recognizes that there is uncertainty over whether the exchange offer and consent solicitation will be successfully completed.

The principal methodology used in these ratings was Equipment and Transportation Rental Industry published in December 2014. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology.

Emeco Holdings Limited, established in 1972 and based in Perth Australia, is a mining equipment rental company.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Saranga Ranasinghe

Asst Vice President - Analyst

Corporate Finance Group

Moody's Investors Service Pty. Ltd.

Level 10

1 O'Connell Street

Sydney NSW 2000

Australia

JOURNALISTS: (612) 9270-8102

SUBSCRIBERS: (852) 3551-3077

Patrick Winsbury

Associate Managing Director

Corporate Finance Group

JOURNALISTS: (612) 9270-8102

SUBSCRIBERS: (852) 3551-3077

Releasing Office:

Moody's Investors Service Pty. Ltd.

Level 10

1 O'Connell Street

Sydney NSW 2000

Australia

JOURNALISTS: (612) 9270-8102

SUBSCRIBERS: (852) 3551-3077

(c) 2016 Electronic News Publishing -, source ENP Newswire

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Financials ($)
Sales 2016 3 539 M
EBIT 2016 1 450 M
Net income 2016 890 M
Debt 2016 1 884 M
Yield 2016 1,33%
P/E ratio 2016 23,91
P/E ratio 2017 21,41
EV / Sales 2016 6,45x
EV / Sales 2017 6,09x
Capitalization 20 959 M
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Mean consensus OUTPERFORM
Number of Analysts 14
Average target price 109 $
Spread / Average Target 0,10%
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NameTitle
Raymond W. McDaniel President, Chief Executive Officer & Director
Henry A. McKinnell Chairman
Linda S. Huber Chief Financial Officer & Executive Vice President
Tony Stoupas Chief Information Officer & Senior Vice President
Basil L. Anderson Independent Director
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