Moody's cuts Valassis outlook to negative

Moody's Investors Service said it changed Valassis Communications Inc.'s outlook to negative from stable and affirmed the company's Baa3 senior unsecured and unguaranteed debt ratings.

The outlook change to negative reflects Moody's concern that the company's announcement that it is reviewing alternatives to improve shareholder value indicate a heightened risk of a leveraging event.

More specifically, the agency said it is concerned that price erosion in the free-standing insert segment is negatively affecting operating cash flow and increases the possibility that Valassis will use existing cash and debt to fund compensating strategic growth initiatives.

Debt to EBITDA was about 2.5x at March 31.

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