S&P gives Valassis notes B-

Standard & Poor's said it assigned its B- rating to Valassis Communications Inc.'s proposed $590 million senior unsecured notes.

The notes are rated two notches below the B+ corporate credit rating on Valassis, reflecting the sizable amount of secured debt in the company's proposed capital structure, the agency said, noting that proceeds from the proposed notes would be used to partially finance Valassis' $1.2 billion acquisition of ADVO, including the refinancing of about $125 million in debt at ADVO.

The B+ corporate credit rating on Valassis was affirmed and the rating outlook is stable, the agency said.

Also, S&P said it affirmed all other ratings on Valassis, including its BB- rating on Valassis' existing $160 million senior unsecured convertible notes due 2033 and $100 million senior unsecured notes due 2009.

Ratings reflects high levels of pro forma leverage and challenges that Valassis will face trying to reverse trends of declining profitability in each of its and ADVO's respective businesses, according to the agency.

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