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TEXT-S&P:Accor rtgs,outlook unchngd on U.S. units sale
June 5, 2012 / 9:16 AM / 5 years ago

TEXT-S&P:Accor rtgs,outlook unchngd on U.S. units sale

(The following statement was released by the rating agency)

June 05 - Standard & Poor’s Ratings Services said today that its ratings and outlook on France-based lodging group Accor S.A. (Accor; BBB-/Stable/A-3) are unaffected by the group’s announced disposal of its U.S. chains Motel 6 and Studio 6. This is because we anticipate that after the transaction closes, Accor will maintain credit ratios in line with our guidance for the current ratings, namely funds from operations to debt of more than 25% and debt to EBITDA of less than 3.5x. In addition, we believe that the sale will have a neutral to mildly positive effect on Accor’s business risk profile, which we assess as satisfactory.

According to management information, the transaction will reduce Accor’s reported net debt by EUR330 million and decrease operating leases by about EUR550 million. We believe that Accor will use this flexibility to finance capital expenditures, bolt-on acquisitions, and shareholder remuneration, in line with its stated financial policy.

Exiting the U.S. will reduce Accor’s geographic diversity and increase its exposure to European markets. However, we think the pull out will likely improve the group’s profitability and increase the percentage of rooms it operates under variable lease, franchise, and management contracts.

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