S&P lowers Dex Media outlook

Standard & Poor's said it revised its outlooks on Dex Media East LLC and Dex Media West LLC to negative from stable and affirmed its BB- corporate credit ratings on both companies. At the same time, S&P assigned its BB- corporate credit rating and negative outlook to Dex Media Inc., the holding company parent of Dex East and Dex West, and a B senior unsecured debt ratings to Dex Media's planned $500 million of notes due 2013 and $250 million (gross proceeds) of discount notes due 2013. Proceeds of the debt issues will be used to pay a dividend to the company's equity holders, The Carlyle Group and affiliates and Welsh, Carson, Anderson & Stowe and affiliates, the ratings agency said.

The outlook revision reflects a change in Dex Media's financial strategy with this transaction that increases the financial risk of Dex Media, Dex East, and Dex West, S&P said. This also heightens the uncertainty over what type of capital structure Dex Media's equity holders would like to maintain in the intermediate term.

S&P said the ratings reflect Dex Media's substantial consolidated pro forma debt levels, with debt to EBITDA in the mid-6X area, and meaningful debt amortization schedules at the operating companies.

Englewood, Colo.-based Dex Media, through its operating subsidiaries, is the nation's fourth-largest telephone directory publisher. The company has about $6.2 billion of pro forma consolidated debt outstanding.

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