Moody’s taking wait and see attitude on Sinclair


Moody’s Investors Service says its debt ratings for Sinclair Broadcast Group remain on review for a possible downgrade, following the company’s announced deal with a note holders group. Moody’s says it is still watching several financial developments at Sinclair.

“Sinclair’s Caa2 Corporate Family Rating (CFR) and Caa3 Probability of Default Rating (PDR) remain on review due to still unresolved issues related to the proposed tender of the company’s 3.0% and 4.875% Convertible Senior Notes (putable in May 2010 and January 2011, respectively, notwithstanding the aforementioned announced ad hoc agreement), including the successful placement of second lien notes as part of the transaction, receipt of an amendment to its existing bank credit facility and agreement with any remaining putable noteholders that are not a part of the tentative agreement. Moody’s is also continuing to review how the tentative agreement with the putable noteholders and any adjustments to the terms of Sinclair’s local marketing agreement with Cunningham Broadcasting Corporation (“Cunningham”) might impact its ability to meet subsequent maturities, including Sinclair Television Group, Inc.’s $175 million revolving credit facility that natures in June of 2011 and $100 million term loan facility maturing in December 2011 (Sinclair’s entire capital structure matures by September 2012). Moody’s will also monitor Cunningham’s ongoing negotiations with its lenders to refinance its own $33.5 million term loan,” Moody’s said.

“The review will continue to focus on Sinclair’s discussions with convertible noteholders and Cunningham and evaluate the effects of any transactions on the company’s future cash flow and capital structure,” the rating agency added.

The last rating action for Sinclair was on July 13, 2009 when Moody’s downgraded the company’s CFR to Caa2 from B3 and its Probability of Default Rating (PDR) to Caa3 from Caa1, while also initiating a review for possible further downgrade.