Fitch has placed the debt and Issuer Default Ratings
(IDR) for both ARAMARK Corporation (ARAMARK), and its wholly owned
subsidiary, Aramark Services, Inc., on Rating Watch Negative as listed
below.
-- Issuer default rating (IDR) 'BBB';
-- Senior unsecured 'BBB'.
The rating action reflects today's announcement that ARAMARK's Board of Directors received a proposal from a group of investors led by Joseph Neubauer, Chairman and CEO, to acquire all of the outstanding shares of the Company for $32/share, or $5.8 billion. The transaction would be financed through equity commitments by the investors, as well as approximately $6.25 billion of debt financing led by Goldman Sachs Credit Partners L.P. and J.P. Morgan Securities, Inc. The Board of Directors of the Company has formed a Special Committee of independent directors to consider the proposal.
While many details are not certain and there are several possible outcomes from the announcement, Fitch believes that on balance there is a high likelihood of a negative outcome for bondholders. Fitch believes it is likely that any resulting transaction could exceed ARAMARK's capacity at its current rating and there is the potential for the present rating to be downgraded more than one notch. Existing language in the 2002 indenture does not protect bondholders from a change in control event and does not limit the company's ability to incur additional indebtedness.
The resolution of Fitch's Rating Watch will be determined by an evaluation of ARAMARK's strategic alternatives and ultimate transaction, as well as the overall effect on bondholder protection measures.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
-- Issuer default rating (IDR) 'BBB';
-- Senior unsecured 'BBB'.
The rating action reflects today's announcement that ARAMARK's Board of Directors received a proposal from a group of investors led by Joseph Neubauer, Chairman and CEO, to acquire all of the outstanding shares of the Company for $32/share, or $5.8 billion. The transaction would be financed through equity commitments by the investors, as well as approximately $6.25 billion of debt financing led by Goldman Sachs Credit Partners L.P. and J.P. Morgan Securities, Inc. The Board of Directors of the Company has formed a Special Committee of independent directors to consider the proposal.
While many details are not certain and there are several possible outcomes from the announcement, Fitch believes that on balance there is a high likelihood of a negative outcome for bondholders. Fitch believes it is likely that any resulting transaction could exceed ARAMARK's capacity at its current rating and there is the potential for the present rating to be downgraded more than one notch. Existing language in the 2002 indenture does not protect bondholders from a change in control event and does not limit the company's ability to incur additional indebtedness.
The resolution of Fitch's Rating Watch will be determined by an evaluation of ARAMARK's strategic alternatives and ultimate transaction, as well as the overall effect on bondholder protection measures.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.