STANDARD  & Poor's (S&P) Ratings Services said on July 8 it put Bulgaria's largest GSM operator MobilTel on its CreditWatch list with positive implications pending the completion of the company's purchase by Telekom Austria.
S&P has given MobilTel a BB+ long-term corporate credit rating and a BB+ rating on the senior secured debt of its Dutch subsidiary MobilTel Finance B.V.
MobilTel has issued a 200-million-euro five-year eurobond through MobilTel Finance.
"The CreditWatch placement follows Telekom Austria's exercising of its option to purchase 100 per cent of MobilTel's share capital in mid-July 2005," S&P credit analyst Michael O'Brien said in a statement, quoted by SEE News.
S&P believes that the change in MobilTel's ownership will enhance the credit quality of the company, depending on the terms of financial or operational support Telekom Austria might provide when the transaction is completed.
The Austrian telecom, which has a BBB+ credit rating from S&P, plans to execute its exclusive call option to buy 100 per cent in MobilTel for up to 1.6 billion euro by the end of this month. Its intentions regarding the financing arrangements currently in place at MobilTel have yet to be confirmed.
If Telekom Austria were to keep some or all of the debt in place, the effect on the credit ratings on MobilTel would be dependent on several items, including the amount of remaining debt and the strategic or financial support the Austrians would provide, the agency said.
In O'Brien's view the effect on the ratings will be determined by S&P's and the CreditWatch placement resolved, as soon as is practical after the debt structure is evident and the transaction is closed.
"A rating equalisation with Telekom Austria is possible, but not assured, and would depend upon the support that the Austrian company would effectively provide to MobilTel in its role as 100-per-cent owner of the company," O'Brien said.
MobilTel claims around 3.2 million subscribers, or about 64 per cent of Bulgaria's mobile market.
The contract for the sale of 100 per cent of MobilTel to Telekom Austria was signed on June 1. The deal is valued at 1.6 billion euro and will be finalised by the end of July, when the buyer will pay for the shares.
The price has several components. It includes a 100 million euro deferred payment, which will be made by the end of 2005 if MobilTel meets certain financial and operational criteria during the third quarter of the year. A further deferred payment, of 182 million euro, will be made in the last quarter of the year but the criteria for this payment concern the first four months of 2005 and have already been met.
The third component is the 80 million euro already paid by Telekom Austria for the option to buy MobilTel. Yet another component is the operator's net debt, which will be undertaken by the buyer.