S&P lowers Radio One

Standard & Poor's said it lowered its corporate credit rating on Radio One Inc. to SD (selective default) from CCC+ because of its failure to make the Aug. 15 interest payment on its 6.375% subordinated notes due 2013.

Bank lenders blocked the interest payment due to ongoing financial covenant violations in its credit agreement, the agency noted.

Notwithstanding this covenant violation, the agency said it believes the company has the financial capacity and liquidity to meet its debt obligations.

At the same time, the agency said it lowered the issue-level rating on Radio One's 6.375% subordinated notes to D from CCC-, while keeping the recovery rating on this debt unchanged at 6.

In addition, the agency said it revised the Creditwatch listing on the company's existing $800 million senior secured credit facilities to negative from developing and kept the 3 recovery rating on this debt unchanged.

S&P added that it also revised its Creditwatch listing on Radio One's existing 8.875% senior subordinated notes due 2011 to negative from developing. The recovery rating on this debt remains unchanged at 6.

"The rating actions reflect Radio One's failure to make its Aug. 15 interest payment on its 6.375% senior subordinated notes, heightened near-term refinancing risk following the company's third extension of its exchange offer for its subordinated notes, and ongoing covenant violations stemming from its existing credit agreement," said S&P credit analyst Michael Altberg.

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