Virgin Media Inc., the British television and Internet company owned by John Malone’s Liberty Global Plc (LBTYA:US), was downgraded to four levels below investment grade by Fitch Ratings.
Fitch cut Virgin Media three levels to B+ from BB+, the ratings agency said today in a statement. Fitch expects Liberty Global to increase Virgin Media’s debt levels as it pushes financing for the deal onto its new unit’s books.
Liberty Global agreed to buy Virgin Media for $16 billion in cash and stock in February in the biggest media deal since the merger that created Thomson Reuters Corp. in 2007. Malone is expanding across Europe, challenging Rupert Murdoch, who controls about 39 percent in British Sky Broadcasting Group Plc. (BSY)
Within a week of announcing the deal, Virgin Media raised $3.65 billion in bonds and sought about $4.7 billion in loans as part of a financing package to help fund the acquisition.
The company is rated Ba1 at Moody’s. That’s one level below investment grade. Standard & Poor’s rates the company’s debt BB, two levels below investment grade. Both companies have a negative outlook on Virgin Media.
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