DBRS Rates DHX Media Add-on to Snr. Unsec. Notes and Confirms Ratings

DBRS Limited (DBRS) has today assigned a rating of BB (low) to DHX Media Limited’s (DHX or the Company) $50 million, 5.875% Senior Unsecured Notes issue, and has also confirmed the Company’s Issuer Rating at BB (low) and its existing Senior Unsecured Notes (the Notes) rating at BB (low)/RR4. All trends are Stable. DHX will use net proceeds from the issuance to reduce debt outstanding on its senior secured term loan facility by a commensurate amount. Furthermore, DBRS notes that on May 2, 2016, DHX issued $65 million of equity, of which a portion of the net proceeds was used to repay senior secured bank debt. This latter action results in a reduction in financial leverage and, as such, is modestly positive to overall credit risk, however, not meaningful enough to change the Issuer Rating.

DBRS notes that the combined effect of these actions will modestly improve the recovery prospects with respect to the Notes but not sufficiently to warrant an upgrade of the recovery rating from RR4 to RR3 at this point.

DHX’s ratings remain supported by the Company’s strong brands, the underlying stability of children’s content and the potential associated with the growing popularity of digital distribution platforms and on-demand viewing. The rat¬ings also consider regulatory headwinds, increasing competition, exposure to ever-evolving consumer preferences and risks associated with growth through acquisition.

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 methodologies are Rating Companies in the Television Broadcasting Industry and DBRS Recovery Ratings for Non-Investment Grade Corporate Issuers, which can be found on our website under Methodologies.