S&P: WMG cut to negative, notes rated B-

Standard & Poor's said it assigned its B- rating to WMG Holdings Corp.'s proposed $250 million floating-rate notes due 2011, $250 million discount notes due 2014 and $200 million 10-year pay-in-kind notes.

Proceeds net of fees are expected to be used to fund a capital distribution to shareholders.

At the same time, S&P revised its outlook on WMG to negative from stable, recognizing the increase in leverage resulting from the proposed debt-financed distribution.

Other ratings on WMG, including the B+ corporate credit rating and B+ secured and B- subordinated debt ratings, were affirmed.

S&P said the rating on WMG reflects its heavy debt burden as a result of the leveraged buyout, risks associated with the industry's migration to a digital downloading business model, continued leakage to piracy and concerns regarding the extent of cost-downsizing.

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