DBRS Confirms Woodbridge Finance at R-1 (middle), Discontinues Medium-Term Notes Rating

DBRS has today confirmed the Commercial Paper rating of Woodbridge Finance Corporation (Woodbridge Finance or the Company) at R-1 (middle). The trend is Stable. DBRS has also discontinued its Medium-Term Notes (MTNs) rating as these notes were repaid.

Woodbridge Finance is a wholly owned subsidiary of The Woodbridge Company Limited (Woodbridge), which is the main investing vehicle for the family of the late Roy H. Thomson. Woodbridge and its subsidiaries hold approximately 50% of the common shares of Thomson Reuters Corporation (Thomson Reuters, rated R-1 (low) and A (low) by DBRS), in addition to a portfolio of other assets that have a market value of greater than $3.0 billion.

Overall, it is the robustness of Woodbridge’s portfolio of assets, low relative leverage and meaningful cash flow from its investment portfolio that support its credit profile and current rating. More specifically, Woodbridge Finance’s rating is supported by the following factors: (1) committed credit lines of $500 million that support its commercial paper program; (2) a guarantee from Woodbridge; (3) pledged Thomson Reuters shares that must equal at least 1.5 times the commercial paper outstanding (and 2.0 times any notes outstanding under its previous MTN program); (4) significant additional shares in Thomson Reuters that are available to be pledged should the value of Thomson Reuters fall; (5) other investments totaling more than $3 billion at September 30, 2011; (6) a limitation on indebtedness currently at $750 million under its commercial paper program (previously $1.5 billion including its previous MTN program); (7) equity control of approximately 50% of Thomson Reuters; (8) economic control of approximately 50% of Thomson Reuters; (9) cash inflows that significantly exceed its borrowing and operating costs giving the Company sizable funds for dividends and additional investments; (10) a structure that separately distinguishes the Thomson family’s interest from the assets of Woodbridge; and (11) a conservative attitude in its use of leverage.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is DBRS Criteria: Rating Parent/Holding Companies and Their Subsidiaries, which can be found on our website under Methodologies.