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S&P rates R.H. Donnelley facility BB
Standard & Poor's said it assigned its BB rating and recovery rating of 3 to R.H. Donnelley Inc.'s planned $1.5 billion senior secured credit facilities.
These facilities consist of a $50 million revolver, $400 million tranche A term loan, and $1.05 billion tranche B term loan. These new facilities will be added to the company's existing credit facilities, which are being amended to include the extension of their maturity dates by one year. This will result in R.H. Donnelley having a $175 million revolver due December 2009, $499.5 million term loan A due December 2009, and $1.9682 billion term loan B due June 2011.
Proceeds from the incremental credit facilities will be used to fund the planned acquisition of SBC Communications Inc.'s directory publishing business in Illinois and northwest Indiana, including SBC's 50% interest in the DonTech partnership, for $1.42 billion in cash.
In addition, S&P affirmed its BB corporate credit and senior secured debt ratings on R.H. Donnelley and its BB corporate credit rating on holding company parent R.H. Donnelley Corp. The outlook is stable.
The B+ rating on R.H. Donnelley Inc.'s $325 million 8.875% senior notes due 2010 remains on CreditWatch with positive implications. This debt will be secured ratably with the senior secured credit facilities in connection with the SBC transaction. The rating will be raised to BB with a 3 recovery rating and removed from CreditWatch when the acquisition is completed.
S&P said the ratings on R.H. Donnelley and its operating subsidiary are based on the consolidated creditworthiness of the company. Credit quality reflects the company's substantial pro forma debt levels, attributable to the planned SBC acquisition and the debt associated with the January 2003 $2.23 billion acquisition of Sprint Publishing & Advertising, the directory publishing business of Sprint Corp.
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