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WestJet sale to Onex prompts Moody's credit rating review for possible downgrade

The Onex Corporation logo is displayed at the company's annual general meeting in Toronto on May 10, 2012. Onex Corp. reported a loss in its latest quarter, a day after it raised its quarterly dividend by 17 per cent. The private equity firm, which keeps its books in U.S. dollars, reported a loss attributable to shareholders of US$158 million or $1.56 per share. THE CANADIAN PRESS/Nathan Denette

TORONTO – Onex Corp.’s purchase of WestJet Airlines Ltd. has prompted Moody’s Investors Service to place the carrier’s credit rating under review for possible downgrade.

The rating agency says it expects Onex to download some of the $5-billion acquisition cost, which includes debt, onto to WestJet when the deal closes.

Such a move would increase the airline’s adjusted leverage, though WestJet has no room in its current rating for any increase, Moody’s says.

The review will examine WestJet’s capital structure and any change in business strategy.

The all-cash deal, announced Monday, will see Toronto-based Onex take WestJet private after 20 years on the Toronto Stock Exchange.

Onex managing director Tawfiq Popatia told The Canadian Press yesterday that the private equity firm plans to stick to WestJet’s current trajectory, with no major strategy shifts in the works.

Moody’s says its review will wrap up around the time the transaction closes later this year or in early 2020.