Moody's may downgrades E.W. Scripps

Moody's Investors Service said it placed E.W. Scripps Co.'s corporate family rating on review for downgrade, along with its Ba2-PD probability of default, Baa2 senior secured bank credit facility and Ba2 rating on its senior unsecured notes.

These rating actions follow news that E.W. Scripp plans to acquire the assets of Katz broadcast networks for about $292 million, gaining full ownership and control after combining its existing 5% minority investment, Moody's said.

The review will focus on the pro forma projections for the combined company, strategic logic of the acquisition, company's financial policies, growth strategy and commitment to de-lever, final capital structure, sources of alternate liquidity to repay debt and the appropriate rating triggers, the agency said.

The conclusion of the review will also be contingent on a high probability of the deal closing, Moody's added.

The announced transaction adds considerable leverage, weakly positioning E.W. Scripps in the rating category, the agency noted.

Moody's said it projects pro forma leverage at close will be near 4.8x, well above the 3.75x rating tolerance.

Despite the top-line growth opportunities, there also is some execution risk with a dependence on successfully executing a shift in the revenue model and extending its distribution beyond its current partners, the agency added.

© 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.