Onex’s purchase of WestJet prompts Moody’s credit ratings review for possible downgrade

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Onex Corp.’s buy of WestJet Airways Ltd. has prompted Moody’s Buyers Service to position two of the provider’s credit score scores below assessment for attainable downgrade.

The ranking company says it expects Onex to obtain among the $5-billion acquisition value, which incorporates debt, onto WestJet when the deal closes. Such a transfer would improve the airline’s adjusted leverage, although WestJet has no room in its present ranking for any improve, Moody’s mentioned Tuesday.

READ MORE: WestJet to be offered in pleasant deal to Onex Corp. for $5 billion

The assessment will look at WestJet’s capital construction and any change in enterprise technique.

The all-cash deal, introduced Monday, will see Toronto-based Onex take WestJet non-public after 20 years on the Toronto Inventory Trade.

Onex managing director Tawfiq Popatia instructed The Canadian Press yesterday that the non-public fairness agency plans to stay to WestJet’s present trajectory, with no main technique shifts within the works.

READ MORE: Meet the rich Canadian behind Onex and the deal to purchase WestJet

On Tuesday, WestJet chief government Ed Sims instructed reporters that going non-public would relieve the Calgary-based firm of the fixed scrutiny that attends publicly held corporations.

“I evaluate it to a farmer who’s continually pulling up his or her radishes, questioning how nicely they’re rising, after which questioning why they’re not rising on a sustainable foundation,” Sims mentioned at WestJet headquarters Tuesday morning, earlier than information of the Moody’s assessment broke.

“We now have the flexibility to deal with our long-term technique to ship towards the lifetime of our property.”

READ MORE: WestJet buyout: From rewards to journey plans, what to find out about Onex’s $5B deal

Watch beneath: Some World Information movies about WestJet.

Sims reiterated that none of WestJet’s 14,000 jobs can be on the chopping block on account of the acquisition.

“What we’re clear on with Onex is that they haven’t spent $5 billion on this entity to attempt to shrink their approach to prosperity,” he mentioned.

As to the origins of the deal, he mentioned: “Onex referred to as us.”

Moody’s mentioned its assessment will wrap up across the time the transaction closes later this yr or in early 2020.

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