RE: ETI ......Broker Upgrade14 Dec 2012 08:49
ETI
A bit of a mouthfull, but is code
for OK things are looking up.
TEXT-S&P revises Enterprise Inns outlook to stable; affirms 'B' Rtg
13 Dec 2012 - 12:41
(The following statement was released by the rating agency) Dec 13 - Overview -- The operating performance of U.K. pub operator Enterprise Inns PLC <ETI.L> (ETI) is stabilizing, while the company continues to reduce debt through asset disposals. -- In addition, in 2012, ETI reduced liquidity risks by refinancing part of its bank facility that expires in 2013 and by prepaying and cancelling bonds at its Unique Pub Finance Co. PLC [ETIUB.UL] (Unique) securitization. ETI is now more than one year ahead of the Unique amortization schedule. -- We are therefore revising our outlook on ETI to stable from negative and affirming our 'B' long-term corporate credit rating on ETI and our 'BB-' issue rating on the senior secured bonds. -- The stable outlook reflects ETI's improved liquidity position, our forecast of a slowdown in the decline of its revenues and earnings, and its ability to generate positive free operating cash flow. Rating Action On Dec. 13, 2012, Standard & Poor's Ratings Services revised its outlook on U.K. tenanted public house (pub) operator Enterprise Inns PLC (ETI, the company) to stable from negative. At the same time, we affirmed our 'B' long-term corporate credit rating on the company. At the same time, we affirmed our 'BB-' issue ratings on ETI's five senior secured bonds. The recovery rating on these bonds is unchanged at '1', reflecting our expectation of very high (90%-100%) recovery for senior secured lenders in the event of a payment default. Rationale The outlook revision reflects ETI's focus on debt reduction through asset disposals, its stabilizing operating performance, and a reduction in liquidity risks owing to the refinancing of part of its bank facility. In addition, ETI has significantly reduced the risk of a dividend lock-up in its Unique Pub Finance Co. PLC (Unique) securitization. In our base-case scenario for the financial year ending Sept. 30, 2013 (financial 2013), we forecast a 5% fall in both revenues and Standard & Poor's-adjusted EBITDA to about GBP660 million and GBP335 million, respectively. The forecast falls are primarily the result of ETI's disposal of an estimated 300 pubs in financial 2013. The operating environment for tenanted pub operators is likely to remain challenging, in our view, and we forecast low single-digit negative like-for-like sales across the whole ETI estate. However, we anticipate positive like-for-like sales growth for approximately 75% of ETI's pubs where the tenant has been in place for more than one year. This indicates to us stabilization in operating performance. Beyond 2013, we expect the pace of the ongoing decline in ETI's revenues and EBITDA over the past few years to slow, as the rationalization of the estate comes to a close. The smaller estate of about 5,200 pubs in 2015, down from 7,800
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