Nord Anglia Education (NORD) Ratings Placed Under Review by Moody's Following Meritas Schools Deal

Moody's Investors Service has placed Nord Anglia Education, Inc's (NAE)(NYSE: NORD) B1 corporate family rating (CFR) and the B1 rating on the $652 million senior secured term loan B and $75 million revolving credit facility issued by Nord Anglia Education Finance LLC under review, with direction uncertain.

These actions were in response to NAE's announcement on 27 April 2015 that it has entered into a definitive agreement with Meritas Schools Holdings, LLC (B3 stable) to acquire schools.

RATINGS RATIONALE

Under the agreement, NAE will acquire six schools for an aggregate purchase price of approximately $575 million. While NAE has obtained committed financing from a bank group to fund the transaction, the actual funding of the aggregate consideration has not yet been determined.

"The rating review primarily reflects uncertainty on NAE's term loan B and revolving credit facility ratings, which could be affected either positively or negatively by the final capital and funding structure of the acquisition," commented Joe Morrison, a Moody's Vice President and Senior Analyst.

Moody's notes that the ratings on the term loan B and revolving credit facility could benefit if the new debt is funded in part with senior unsecured facilities. On the other hand, these ratings and the CFR would be pressured if the acquisition is funded largely with senior secured debt.

This large-scale acquisition demonstrates the company's strong appetite for acquisitions, which is negative for the ratings. However, if it strengthens its financial discipline through significant equity funding in the total funding mix, the downward pressure could be mitigated.

The review will examine the final funding structure of the acquisition and resultant impact on NAE's capital structure, expected financial performance after the acquisition, and post-acquisition growth plans and financial strategy.

The principal methodology used in these ratings was Business and Consumer Service Industry published in December 2014. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

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