(Bloomberg) -- Luxury watchmaker Breitling AG is taking advantage of Europe's hot credit market to raise debt for shareholder payouts for the second time in two years.
The CVC-backed company is selling a leveraged loan of about 950 million Swiss francs ($1 billion), from which nearly a third will go toward paying out dividends to shareholders, according to an analysis by Moody's Investors Service. That's nearly double the amount it paid out in November 2019, Moody's data show.
“The transaction demonstrates Breitling's aggressive financial policy as it represents the second dividend recap in the last two years since CVC took ownership of the company in 2017,” analysts wrote in a note. “Both recapitalisations led to a material increase in leverage.”
CVC declined to comment on the Moody's report.
Such funding for dividends has slowed in recent months as loan pricing climbed to attract buyers overwhelmed by this year's supply. The third quarter saw only 1.3 billion euros ($1.5 billion) raised for deals that included distribution to shareholders, according to data compiled by Bloomberg. That's a significant drop from the 12 billion euros raised in the first quarter, the highest in 14 years.
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Moody's assigned a B2 rating, or five notches above investment grade, to Breitling's latest offering. It said the proposed dividend recapitalisation is credit negative, with the rating being weakly positioned at B2 because debt-to-EBITDA will increase significantly.
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