S&P: TransWestern outlook negative

Standard & Poor's said it revised its outlook on TransWestern Publishing Co. LLC to negative from stable and affirmed its BB- corporate credit and senior secured debt and B subordinated debt ratings on the company.

S&P said the outlook change reflects a planned dividend to Thomas H. Lee Partners and all other equity investors of about $200 million, resulting in a meaningful deterioration in the overall financial profile. Pro forma debt to EBITDA is in the 7x area.

The agency said the ratings on TransWestern reflect the company's substantial pro forma debt levels due to the planned dividend, its initial capitalization, and subsequent growth through acquisitions. The company also faces competitive business conditions against the incumbent telephone directories. In addition, results during 2003 were hurt by delays in the publication of a significant number of directories.

These factors are tempered by TransWestern's historically stable revenue and cash flow throughout the advertising revenue cycle, geographic diversity, a large and diversified customer base of small- to medium-size businesses, and favorable growth prospects.

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