DBRS Rates 407 International Inc. Debt Issue at “A,” Stable

DBRS has today assigned a rating of “A” to the additional $200 million Series 12-A2 senior notes issue (the Notes) of 407 International Inc. (407 or the Company). The Notes are being issued from 407’s August 3, 2012, shelf prospectus.

The intended use of proceeds from the Notes will be: (i) to repay existing indebtedness under the Company’s bank facility; (ii) to fund the Series Reserve Account in the Debt Service Reserve Fund (as both terms are defined in the Indenture) in respect of the Notes; and (iii) for general corporate purposes. The financing is consistent with DBRS’s expectations incorporated in its July 26, 2012, confirmation of 407’s ratings.

The Series 12-A2 Notes have a maturity date of September 11, 2052, and rank pari passu with all other senior obligations of the Company. As a result, the rating is consistent with the ratings previously assigned by DBRS to the Company’s similarly ranked bonds outstanding.

For the quarter ended March 31, 2013, total trips were down by 2.2%, while the average number of workday trips decreased 0.5% over the same period in 2012, impacted by the severity of the weather. Excluding the impact of two fewer workdays for Q1 2013, patronage has been essentially flat in 2013. As compared to Q1 2012, higher tolls drove a 6.5% revenue increase, while operating expenses increased by 4.3%, leading to EBITDA that was 7.0% higher during the period.

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

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodology is Rating Public-Private Partnerships, which can be found on our website under Methodologies.