Fitch: BTG Pactual Exit is Neutral for Rede D'Or's Ratings
OREANDA-NEWS. Fitch Ratings believes that the impact of the change in the shareholding structure of Rede D'Or Sao Luiz S.A. (Rede D'Or) will be neutral to the company's credit quality.
Today, BANCO BTG PACTUAL S.A. (BTG Pactual, Local and Foreign currency Issuer Default Ratings
'BBB-' / 'AA(bra)', Rating Watch Negative) and BTG PACTUAL PARTICIPATIONS, LTD. (together BTG Pactual Group) announced that it sold its 11.9% ownership interest in Rede D'Or to GIC Pte. Ltd. (Singapore's sovereign-wealth fund) for approximately BRL2.4 billion. BTG Pactual Group will no longer have any ownership interest in the company. Rede D'Or's new shareholder structure will comprise the Moll family - the hospital group founder that will continue to control the company with a 59.3% interest, GIC with a 28.6% stake, and Carlyle Group, which will maintain its 10.3% interest. Fitch currently rates Rede D'Or 'BB+'/'AA(bra)', Stable Outlook.
Fitch does not expect Rede D'Or to change its business or financial strategy as a result of the new shareholder structure. The ratings already incorporate Rede D'Or's ongoing aggressive growth strategy via acquisitions, the growth-oriented nature of its main shareholders, and consolidation trends in the industry.
Rede D'Or's ratings reflect its large business scale, strong competitive position in the fragmented hospital industry in Brazil, the defensive nature of its business fundamentals through economic cycles, and its track record of maintaining a solid liquidity position. Rede D'Or's desire to expand should limit any material deleveraging over the medium term. Fitch forecasts net adjusted debt-to-EBITDAR to be in the range of 2.5x to 3.0x in the next three years.
Rede D'Or generated BRL1.6 billion of EBITDAR in the last 12 months (LTM) ended Sept. 30, 2015 with net adjusted debt/EBITDAR of 2.5x, as per Fitch calculations. At the end of the LTM, the company had BRL4.9 billion of debt, of which BRL621 million is due in the short term, and BRL991 million of cash and marketable securities.
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