Fitch Ratings has assigned Silknet JSC's forthcoming USD300 million senior unsecured notes an expected rating of 'B(EXP)' with a Recovery Rating of 'RR4'.
The company plans to use the proceeds from the debt issuance to refinance its current USD200 million Eurobond due in 2024 and lari-denominated bonds due in 2022, to fund shareholder distributions and for general-corporate purposes. Silknet has the ability to repay some of the new bond shortly after issuance. The final rating on the notes is contingent upon receipt of the final documents conforming to information already received.
"We expect Silknet's funds from operations (FFO) net leverage to remain within our 'B' rating sensitivities following the transaction.
Silknet is the incumbent telecoms operator in Georgia with an extensive backbone and last-mile infrastructure across the country. Its acquisition of Geocell, the second-largest mobile operator in Georgia in 2018 has turned Silknet into a diversified telecom services provider and more than doubled its revenue and EBITDA. However, the company's small absolute size remains a strategic weakness. We expect the company's Fitch-defined EBITDA to be about USD61 million in 2021 (assuming a GEL/USD exchange rate of 3.1)",- the report reads.
