S&P: PanAmSat unaffected

Standard & Poor's said Tuesday that PanAmSat Holding Corp.'s filing of an S-1 registration statement for a potential $1 billion initial public offering of common stock does not affect the ratings or outlook on the company or on its subsidiary, PanAmSat Corp. (BB/stable/--).

PanAmSat intends to use proceeds to repay $345.2 million of its senior secured term loan A, redeem $353.5 million of its 9% senior notes, and pay a $200 million one-time dividend to existing shareholders.

Although the debt reduction will lower consolidated debt to EBITDA to the low 5x area from more than 6x and eliminate term loan A amortization payments through 2007, S&P said leverage still remains relatively high and the company's intent to pay a substantial quarterly dividend could slow further credit strengthening. The ratings are also limited by the shareholder-oriented financial policy exhibited by PanAmSat since it was purchased by an investor group led by Kohlberg, Kravis, Roberts & Co. in August 2004.

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