S&P: Disney on watch

Standard & Poor's said it placed its ratings on the Walt Disney Co.:, including the A long-term corporate credit rating and A-1 short-term rating, on Creditwatch with negative implications.

The Creditwatch listing was in response to diversified entertainment company Disney's announcement of an agreement to acquire Marvel Entertainment Inc. for about $4.0 million, with a 60%/40% mix of cash and stock, the agency said.

In its view, Disney may need to issue debt to supplement its cash for this transaction, S&P said, noting that it is concerned that Disney's potential issuance of debt, its plan to buy back the stock portion within one year, the high purchase price, and the potential for continuing EBITDA declines in Disney's businesses if the recession is prolonged will lead to debt leverage remaining above its threshold for an extended period.

"For the past few quarters, Disney's leverage has been slightly above its 2.0x threshold for the A level rating," said credit analyst Deborah Kinzer.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.