S&P may lift SourceMedia

Standard & Poor's said it assigned a CCC+ corporate credit rating to SourceMedia Inc. and affiliate company Accuity Inc. and placed the rating on CreditWatch with positive implications, reflecting the likelihood of an upgrade following the closing of the company's proposed refinancing.

The company's new senior secured credit facilities were assigned a B+ issue-level rating with a recovery rating of 2, indicating expectation of 70% to 90% recovery.

SourceMedia's existing $100 million term loan B and Accuity's existing $85 million term loan B, both due in 2011 were rated CCC+ with a recovery rating of 3, indicating expectation of 50% to 70% recovery.

Proceeds of the new senior secured term loan will be used to refinance its entire capital structure, which would relieve pressure from the company's near-term debt maturities.

S&P said it will likely raise the corporate credit rating to B with a stable rating outlook if the proposed refinancing closes.

The CCC+ corporate credit rating reflects SourceMedia's significant cash flow concentration in a small number of financial publications, an aggressive financial policy and a focus around the volatile financial and technology industries, the agency said.

It also reflects SourceMedia's significant maturities in the second half of 2011, if the refinancing is not completed, the agency noted.

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