DBRS Finalizes Provisional Ratings on DHX Media Ltd. and Confirms Ratings Following the Announced Acquisition of Nerd Corps

DBRS Limited (DBRS) has today finalized the provisional Issuer Rating of BB (low) on DHX Media Ltd. (DHX or the Company) and the BB (low)/RR4 rating on the Company’s Senior Unsecured Notes (the Notes). After its review of all documentation associated with the recent offering, DBRS has confirmed that the terms of the issuance of the Notes were largely consistent with those contemplated at the time the provisional rating was assigned on November 19, 2014. DHX has issued $175 million in an aggregate principle amount of 5.875% Senior Unsecured Notes due December 2021. DBRS notes that DHX upsized the offering from the previously expected $150 million. As the proceeds will be used to pay down bank debt, this change does not significantly affect the credit risk profile of DHX and has a slight positive impact on the recovery prospects of the Notes.

DBRS has also confirmed DHX’s ratings following the Company’s announced acquisition of Nerd Corps Entertainment Inc. (Nerd Corps) for $57 million. The transaction will be financed with up to $33 million of cash and drawings under the Company’s revolving facility, with the remainder to be funded through the issuance of DHX shares. Nerd Corps brings more than 200 half hours of proprietary children's content to DHX's library (currently 11,400 half hours) and adds an animation studio in Vancouver, B.C. Because of Nerd Corps’ relatively small size and its modestly positive impact on leverage and coverage, DBRS does not believe the acquisition significantly affects DHX’s credit risk profile. Completion of the transaction is subject to a number of conditions, including the receipt of bank and Toronto Stock Exchange consent, and is anticipated to close by December 24, 2014.

For additional information on DBRS’s view of the credit quality of DHX or its recent debt issuance, please refer to the DBRS report dated November 19, 2014.

Notes:
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 Companies in the Television Broadcasting Industry, which can be found on our website under Methodologies.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.