Fitch: R.H. Donnelley outlook negative

Fitch Ratings said it affirmed the issuer default ratings of R.H. Donnelley Corp., R.H. Donnelley, Inc., Dex Media, Inc., Dex Media East and Dex Media West at B+; the senior unsecured debt of R.H. Donnelley and Dex Media at B/RR5; the bank facility of Dex Media East at BB+/RR1; and Dex Media West's senior unsecured debt at BB+/RR1 and senior subordinated debt at B/RR5.

In addition, the agency expects to rate the amended R.H. Donnelley, Inc. credit facility and the proposed Dex Media West credit facility BB+/RR1.

The outlook has been changed to negative from stable.

The company disclosed in its 10-Q report on Thursday that it launched a series of financing activities that are expected to reduce near-term mandatory debt repayments, provide additional covenant flexibility and extend its maturity profile, including the amendment of the R.H. Donnelley, Inc. credit facility and refinancing of the Dex Media West credit facility. The company also plans to exchange $700 million in lower-interest-rate senior unsecured notes outstanding at R.H. Donnelley for $488 million of higher-interest-rate notes at R.H. Donnelley, Inc.

The agency said the enhanced covenant and maturity flexibility provided by the potential credit facility actions are offset by materially higher interest costs.

The negative outlook reflects that top-line pressure, the limited scalability of the cost structure and increased interest costs could make it difficult for the company to meet Fitch's prior deleveraging expectations, the agency said.

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