Like the rest of us, Moody’s Investors Service is waiting to see whether or not the Clear Channel buyout gets to closing. Meanwhile, the company’s debt ratings remain under review.
Here is what Moody’s said in a statement yesterday afternoon:
“The company’s ratings remain under review for possible downgrade pending closing of the acquisition. Moody’s will continue to monitor developments in order to assess the likelihood that the transaction will close.
If the buyout is completed, the company’s pro-forma leverage is expected to increase substantially and the post-acquisition company will have significantly weaker credit metrics. Assuming the transaction is completed as currently contemplated, Clear Channel will likely be assigned a Corporate Family Rating of B2 and the rating on the existing senior notes is likely to be notched down to Caa1 based on their expected subordination to the new senior secured debt facilities and the new senior notes.
In the event the proposed leveraged buyout does not close, Clear Channel’s ratings still have a high probability of being downgraded to speculative grade based on the company’s now demonstrated predilection for shareholder friendly behavior. If the buyout does not close, the review will focus on the company’s business strategy and financial policy including management’s tolerance for financial risk.”
