S&P reviews ADT

Standard & Poor's said it placed its BB- corporate credit rating on ADT Corp. and the issue level ratings of certain of its senior unsecured notes on CreditWatch with negative implications.

Additionally, the agency affirmed the BB- issue level ratings on $3.75 billion of ADT's existing unsecured notes, consisting of five issues. The corresponding recovery ratings remain at 3H.

S&P said the CreditWatch placement follows ADT's announcement that Prime Security Services Borrower LLC will acquire the company for about $13 billion. The combined company will have greater scale, with pro forma revenue of about $4 billion and be led by management from Prime Security, which has a good operating track record.

Nonetheless, weaker credit metrics, including leverage above 8 times and free cash flow to debt of below 2% on a pro forma basis, and the substantial execution risk to integrate ADT, a significantly larger business in terms of revenues and clients, partially offset these positive factors, S&P said.

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