Moody's rates Block Communications refi


With Block Communications preparing to sell $250 million of new bonds to refinance its senior debt and buy back its current bonds, Moody’s Investors Service has weighed in with its rating of the new issue. Moody’s reaffirmed its Corporate Family Rating (CFR) for Block and said the outlook is stable.

Moody’s Investors Services assigned a Ba3 rating and LGD4 — 58% assessment to Block’s proposed issue of $250 million in Senior Notes due 2020. Moody’s also affirmed Block’s Ba3 Corporate Family Rating (CFR) and Ba3 Probability of Default Rating (PDR). The new debt issuance will be used to refinance the existing $115 million 1st lien senior secured term loan and $150 million senior notes. The rating outlook is stable, the ratings agency added.

“The Ba3 CFR reflects our expectation of Block’s moderate pro forma debt-to-EBITDA ratio of 3.4x (including Moody’s standard adjustments) and approximately 5% pro forma free cash flow-to-debt ratios by the end of FY2012. Block’s consistent cable operations support the Ba3 corporate family rating, despite continued EBITDA losses from the newspaper segment and broadcast EBITDA margins below rated industry peers. Ratings reflect the stable performance of cable operations and our view that management needs to ensure that EBITDA losses from newspaper operations are contained so they do not magnify their current negative impact on consolidated results. Secular changes negatively impacting traditional print media, especially newspapers, continue to pressure the company’s publishing revenue and free cash flow. Additionally, the advertising-reliant publishing and broadcast segments expose the company to economic cycles. Liquidity is good with cash balances expected to remain above $20 million and approximately $85 million of availability under its $100 million revolver due 2016 (unrated),” Moody’s said in its ratings analysis.

“The stable outlook reflects our expectation that debt-to-EBITDA ratios (including Moody’s standard adjustments) will remain below 4.5x with free cash flow remaining positive as continued growth in EBITDA for cable and telephony segments offsets losses from newspapers,” it added.

A privately held diversified media company, Moody’s noted that Block Communications has operations in cable television (48% revenues in 2010), newspaper publishing (36%), and television broadcasting (10%). Its cable operations serve approximately 159,500 customers in the greater Toledo, Ohio metropolitan area (including Michigan suburbs) as well as Sandusky, OH.
Block operates two daily metropolitan newspapers in Pittsburgh, PA and Toledo, OH, as well as television stations in Louisville, KY; Lima, OH; Boise, ID; and Decatur, IL. The company maintains its headquarters in Toledo, OH and generated revenues of $442 million through the 12 months ended September 30, 2011.


.. Issuer: Block Communications, Inc.

….. New $250 Million Senior Notes due 2020: Assigned Ba3, LGD4 — 58%


.. Issuer: Block Communications, Inc.

….. Corporate Family Rating: Affirmed Ba3

….. Probability of Default Rating: Affirmed Ba3

Outlook Actions:

.. Issuer: Block Communications, Inc.

. Outlook is Stable

To be withdrawn at the close of the proposed transaction

. $115 Million 1st lien senior secured term loan ($108.4 Million outstanding) due December 2012: Ba1, LGD2 — 16%

. $150 Million senior notes ($150 Million outstanding) due December 2015: B1, LGD5 — 71%