S&P keeps Valassis Communications on watch

Standard & Poor's said its ratings on Valassis Communications Inc., including its BB corporate credit rating, remain on CreditWatch with negative implications where they were placed on June 26.

S&P noted that the CreditWatch update follows the company's announcement it has sued ADVO Inc. in Delaware Chancery Court to rescind its $1.3 billion merger agreement with ADVO, alleging fraud and material adverse changes in ADVO's business.

While the complaint filed with the court is not yet publicly available, the CreditWatch listing reflects the uncertainties surrounding the resolution of the complaint at a time when Valassis' existing business operations have been challenged, S&P noted.

In resolving the CreditWatch listing, S&P said it will evaluate the financial impact related to the resolution of the suit and assess prospects for Valassis' businesses, which have been under pressure.

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