Moody's rates Time loans Ba1, notes B1

Moody's Investors Service said it assigned a Ba3 corporate family rating, a Ba3-PD probability of default rating and an SGL-1 speculative grade liquidity rating to Time Inc., Ba1 (LGD2, 25%) ratings to its $500 million first-lien senior secured revolving credit facility and $900 million first-lien senior secured term loan and a B1 (LGD5, 80%) rating to its $500 million senior notes. The outlook is stable.

Proceeds from the term loan, the notes and roughly $35 million of cash are expected to fund about $1.4 billion of transactions in conjunction with the company's spinoff from parent company Time Warner Inc., including the purchase of U.K. publishing operations from Time Warner and a special dividend to Time Warner.

Time's Ba3 corporate family rating reflects the company's moderately high pro form debt-to-EBITDA ratio, which Moody's estimates at about 3 times at closing sometime before the end of June. The agency said the ratings also incorporate persistent declines in circulation of the company's print-based magazines, lower demand for print advertising and competition from established rivals.

Ratings are supported by the company's large scale as the No. 1 magazine publisher in the United States based on ad revenue and readership, the agency said. Moody's believes new management has good experience in publishing and media and will be successful in its efforts to grow non-print revenue streams to help offset the persistent decline in print ad demand.

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