VistaJet Malta Finance P.L.C. — Moody’s assigns a Caa1 rating to Vista Global’s new $800

Rating Action: Moody’s assigns a Caa1 rating to Vista Global’s new $800 million senior unsecured notes; outlook positiveGlobal Credit Research – 19 Jan 2022Frankfurt am Main, January 19, 2022 — Moody’s Investors Service (“Moody’s”) has today assigned a Caa1 rating to the $800 million backed senior unsecured notes to be issued by VistaJet Malta Finance P.L.C. (VistaJet) and co-issued by XO Management Holding Inc. At the same time the rating agency affirmed the B3 corporate family rating (CFR) and the B3-PD probability of default rating (PDR) of Vista Global Holding Ltd. (Vista Global). Concurrently Moody’s affirmed the Caa1 rating of the existing backed senior unsecured notes issued by VistaJet Malta Finance P.L.C. and co-borrowed by XO Management Holding Inc. The outlook on all ratings has been changed to positive from stable.The proceeds of the planned issuance will be used to redeem in full the existing $700 million backed senior unsecured notes maturing in 2024 along with covering prepayment premium and refinancing expenses and thus serve to extend the group’s debt maturity profile and to reduce interest expense. The effect of a roughly $70 million debt increase will be mitigated by an approximately $30 million increase in cash as a result of the transaction.A full list of affected ratings can be found at the end of this press release.RATINGS RATIONALEThe outlook change to positive reflects Vista Global’s strengthened operating performance, which materially improved during 2021 on the back of higher flight activity, increased aircraft utilization rates and the contribution from additional aircraft added to the fleet combined with the contribution from recent acquisitions. Specifically, revenue increased to around $1.6 billion in 2021 from roughly $900 million in 2020 as a result of materially increased flying activity and higher revenue recognition in the Flight Solution Program (FSP) segment along with industry tailwinds leading to a steep increase in membership figures for both VistaJet and XO brands.Profitability increased on the back of higher revenue combined with improved aircraft utilization rates and the operational introduction of Global 7500 aircraft. Based on preliminary results Moody’s adjusted EBITDA has increased to $375 million in 2021 from $181 million in 2020. Moody’s adjusted EBITDA margin increased to 23.5% in 2021 from 20.3% in 2020. Supported by industry tailwinds, capitalized by Vista Global in the form of a broader membership base, we expect a further improvement in operating performance. Higher aircraft utilization rates and additional aircraft, further upsizing the group’s fleet size, will lead to Moody’s adjusted EBITDA margin improving towards 27% in the next 12-18 months. In our base scenario we expect Moody’s adjusted free cash flow — calculated after contractual aircraft financing repayments — to turn positive after several years of being negative.The recovery experienced since Q2 2020 has resulted in a decline in leverage. The positive effect from increasing EBITDA has been partially offset by an increase in Moody’s adjusted Debt in the context of the currently ongoing investment plan of Vista Global aiming at increasing its total fleet size in order to capitalize on increased demand translated into broader membership base. Therefore, Moody’s adjusted Debt/EBITDA has declined to 6.3x in 2021 (5.6x including the impact from Aircraft Trading/Monetization of Put Options), based on preliminary results, from 11.3x in 2020 while cash flow generation has also improved with Moody’s adjusted RCF/Net Debt increasing to 9% in 2021 from 2.4% in 2020 and Moody’s adjusted FCF/Debt has improved to -5.4% from -12.8% for the same period. We expect Moody’s adjusted Debt/EBITDA to decline towards 5.5x by year-end 2022 (around 5.0x including the impact from aircraft trading / monetization of put options) supported by moderately positive Moody’s adjusted FCF generation combined with contractual aircraft financing repayments.The B3 CFR reflects the company’s strong position in the market for corporate jet travel; significant contracted revenue from a diversified customer base; and high aircraft utilization rates, which enable a relatively cost-efficient business aviation solution for its customers.The major constraints to the CFR are Vista Global’s exposure to cyclical demand; high leverage of 6.3x Moody’s-adjusted debt/EBITDA in 2021 based on preliminary results (5.6x including the impact from aircraft trading / monetization of put options); and a competitive and highly fragmented market along with a still adequate liquidity profile. Further positive rating pressure requires sustained performance improvements and a further strengthening of the company’s liquidity profile.OUTLOOKThe positive outlook reflects Moody’s expectation that Vista Global will be able to capitalize on the currently favorable environment in business aviation and further improve its credit metrics on the back of higher revenue, improved aircraft utilization rates and larger fleet size leading to Moody’s adjusted Debt/EBITDA improving towards 5.5x within the next 12 – 18 months.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSUpward pressure on the ratings could develop if Vista Global is able to (1) further deleverage its capital structure, such as Moody’s-adjusted debt/EBITDA improving to below 5.5x on a sustained basis, (2) generate material free cash flow in excess of aircraft debt service leading to an improved liquidity profile and (3) improve its EBITA margin towards mid-teens in percentage terms on a sustained basis.Likewise, downward pressure could exert in case of indications that the company is unable to (1) maintain Debt /EBITDA below 7x on a sustained basis, (2) maintain utilization rates resulting in weakening EBITA margins to below double digit terms in percentage terms on a sustained basis in the next 12-18 months, (3) sell a sufficient level of Flight Solution Program hours to secure meaningful quarterly cash payments for a prolonged period, (4) generate sufficient free cash flow to meet the scheduled amortization of its aircraft financings leading to a deterioration in liquidity, or (5) if it continues to finance its growth with additional debt leading to weaker credit metrics.ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS (ESG)Moody’s takes into account the impact of environmental, social and governance (ESG) factors when assessing companies’ credit quality. The business and consumer service industry has generally limited direct exposures to environmental risks. However, Vista Global has exposure to environmental risks as a fairly large consumer of fuel, which is widely used in business aviation.Vista has committed to carbon neutrality by 2025 – 25 years ahead of the current aviation community goal of a 50% reduction of emissions by 2050 and has seen positive traction given a significant majority of VistaJet members have offset their fuel use-related emissions through certified carbon credits.LIQUIDITYVista Global’s liquidity is still adequate and is partly reliant on significant supplier reimbursements. Alternative sources of liquidity include the equity values of the VistaJet aircraft and raising new equity.According to our liquidity risk assessment funds from operations and cash on hand as of 30 September 2021, are sufficient to cover expected cash outflow over the twelve-months period to September 2022. However, we note that the company had fully drawn under its $61 million revolving credit facility, which appears to be low given the increased scale of operations. In our base scenario, we expect the company to be compliant with the springing financial covenant of 6.8x senior net leverage.LIST OF AFFECTED RATINGS..Issuer: Vista Global Holding Ltd.Affirmations:…. LT Corporate Family Rating, Affirmed B3…. Probability of Default Rating, Affirmed B3-PDOutlook Action:….Outlook, Changed To Positive From Stable..Issuer: VistaJet Malta Finance P.L.C.Affirmations:….BACKED Senior Unsecured Regular Bond/Debenture, Affirmed Caa1Assignments:….BACKED Senior Unsecured Regular Bond/Debenture, Assigned Caa1Outlook Action:….Outlook, Changed To Positive From StablePRINCIPAL METHODOLOGYThe principal methodology used in these ratings was Business and Consumer Services published in November 2021 and available at Alternatively, please see the Rating Methodologies page on for a copy of this methodology.COMPANY PROFILEHeadquartered in Dubai, Vista Global Holding Ltd. (Vista Global) is the holding company of a leading global business aviation provider that serves corporates and high net worth individuals. The company offers flights through its two subsidiaries VistaJet and XOJET primarily by membership programs and on-demand charter on either its own aircraft (“on-fleet division”) or on a partner’s aircraft (“off-fleet division”) and generated approximately $1.6 billion of revenues in 2021. Vista Global operates a fleet of 160 aircraft including ultra-long range, large cabin, super-mid cabin, midsize cabin and light jet aircraft. The company is owned by majority shareholder and founder Thomas Flohr and minority shareholders Rhône Capital, Mubadala and Clearlake.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on any affected securities or rated entities receiving direct credit support from the primary…

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