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Switzerland – Moody’s changes outlook on Adecco over net debt concerns

28 June 2012

Following Adecco’s announcement this week that it intended to buy back up to €400 million of its shares, Moody's Investors Service yesterday changed the outlook on the company’s long-term credit rating (Baa3) to ‘stable’ from ‘positive’.

“We would expect the uncertain economic climate to exert pressure on Adecco's profit margins for the remainder of the year and, together with the announced share buybacks, contribute to an increase in its net debt, preventing the company from reaching the thresholds set for an upgrade in the near term,” said lead analyst for Adecco at Moody’s, Knut Slatten. “The stabilisation of the outlook follows the company's announcement of a € 400 million share buyback programme, expected to start in mid-July 2012,”

Despite Moody’s expectation of weaker credit metrics this year, Adecco said today it had issued a €208.1 million (CHF 250 million) long 5-year bond with a coupon of 1.875% and a €104.0 million (CHF 125 million) long 8-year bond with a coupon of 2.625% through Adecco S.A.

“The proceeds will be used to fund the planned share buyback programme of up to €400 million on a second trading line, with the aim of subsequent cancellation of the shares and reduction of the share capital,” the Group said. The settlement date for the bonds is 18 July 2012.

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