S&P rates new Granite Broadcasting notes CCC

Standard & Poor's said it assigned its CCC rating to Granite Broadcasting Corp.'s proposed $300 million senior secured notes due in 2010 and affirmed its ratings, including the CCC long-term corporate credit rating, on Granite.

The outlook is negative.

S&P said the affirmation reflects ongoing concerns about Granite's weak cash flow and heavy debt burden, despite the elimination of the company's upcoming debt maturities by the proposed transaction. Limited liquidity is derived from a relatively thin cash cushion, particularly given the modest cash flow potential of Granite's station portfolio.

Although cash flow is expected to grow in 2004, benefiting from political and Olympic advertising, Granite is likely to need to complete a strategic transaction to meet its near-term financial obligations.

S&P said the rating on Granite reflects very high financial risk from debt-financed TV station acquisitions, an expensive capital structure, the prolonged ramp-up period for WB Network affiliates, discretionary cash flow deficits, and limited liquidity. These factors are only partially offset by Granite's ownership of major network-affiliated stations that are profitable and have relatively good margin potential and asset values.

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