S&P assigns B to Radio One loan

Standard & Poor's said it affirmed its B- corporate credit rating on Radio One Inc.

The outlook remains stable.

The agency also affirmed its CCC issue-level rating and 6 recovery rating on the company's existing senior subordinated notes. The 6 recovery rating indicates an expectation for negligible recovery (0%-10%) of principal for lenders in the event of a payment default. The issue-level rating is two notches lower than Radio One’s corporate credit rating.

At the same time, S&P assigned its B issue-level and 2 recovery ratings to Radio One's proposed $350 million term loan due 2018 and $350 million senior secured notes due 2022. The 2 recovery rating indicates an expectation for substantial recovery (70%-90%; high end of the range) of principal for lenders in the event of a payment default. The rating is one notch higher than the corporate credit rating.

The agency also revised its liquidity assessment on the company to "adequate" from "less than adequate." S&P expects that the company will successfully complete the proposed refinancing under the proposed terms and that this will improve its liquidity and restore a greater-than-15% margin of compliance against its financial covenants over the next 12 months.

Proceeds from the debt, in addition to an unrated $25 million asset-backed credit facility and $12 million Comcast senior subordinated notes due 2019, will be used to repay Radio One’s existing $119 million TV One senior secured notes and $369 million term loan (including related fees, expenses, and call premium), as well as to fund the $227 million purchase of Comcast's 47½% interest in TV One, bringing its ownership level to 99.6% in this entity.

The issue-level ratings on the existing $369 million term loan and $25 million revolving credit facility will be withdrawn when the proposed financing is complete and the notes are repaid in full.

Radio One’s B- corporate credit rating reflects an assessment of the company's business risk profile as "weak" and its financial risk profile as "highly leveraged."

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