The companies have entered into a definitive agreement where
Fitch's ratings materially rely on QVC, with Liberty's other investments viewed as incremental support to the ratings. Fitch does not ascribe a material weight to the e-commerce businesses when assessing the consolidated credit profile. These businesses are relatively small in size, accounting for approximately 4% of consolidated Liberty EBITDA. Liberty's e-commerce companies continue to have revenue growth with a year-over-year increase of 6.6% for the latest 12 month (LTM) period ending
Fitch's ratings for Liberty and QVC reflect the consolidated legal entity/obligor credit profile, rather than the tracking stock structure. Based on Fitch's interpretation of the Liberty bond indentures, the company could not spin out QVC without consent of the bondholders, based on the current asset mix at Liberty. QVC generates 84% and 98% of Liberty's revenues and EBITDA, respectively. In addition, Fitch believes QVC makes up a meaningful portion of Liberty's equity value. Any spin-off of QVC would likely trigger the 'substantially all' asset disposition restriction within the Liberty indentures.
Fitch does not expect any material change in leverage as a result of the transaction, due to the nominal EBITDA generated by Provide Commerce relative to the consolidated EBITDA generated by Liberty.
Fitch currently rates Liberty and QVC as follows:
--Issuer Default Rating (IDR) 'BB';
--Senior unsecured debt 'BB'.
--Senior secured debt 'BBB-'.
The Rating Outlook is Stable.
Additional information is available at 'www.fitchratings.com'.
Source: Fitch Ratings
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