Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
Don't want to see this again?
Accept our to continue to Moodys.com:
AND SCROLL DOWN!
By clicking “I AGREE” [at the end of this document],
you indicate that you understand and intend these terms and conditions to be
the legal equivalent of a signed, written contract and equally binding, and
that you accept such terms and conditions as a condition of viewing any and all
Moody’s information that becomes accessible to you [after clicking “I AGREE”] (the
“Information”). References herein to “Moody’s” include Moody’s
Corporation, Inc. and each of its subsidiaries and affiliates.
Terms of One-Time Website Use
you have entered into an express written contract with Moody’s to the contrary,
you agree that you have no right to use the Information in a commercial or
public setting and no right to copy it, save it, print it, sell it, or publish
or distribute any portion of it in any form.
acknowledge and agree that Moody’s credit ratings: (i) are current opinions of
the future relative creditworthiness of securities and address no other risk; and
(ii) are not statements of current
or historical fact or recommendations to purchase, hold or sell particular
securities. Moody’s credit ratings and
publications are not intended for retail investors, and it would be reckless
and inappropriate for retail investors to use Moody’s credit ratings and
publications when making an investment decision. No
warranty, express or implied, as the accuracy, timeliness, completeness,
merchantability or fitness for any particular purpose of any Moody’s credit
rating is given or made by Moody’s in any form whatsoever.
3. To the extent permitted by law, Moody’s and its directors,
officers, employees, representatives, licensors and suppliers disclaim
liability for: (i) any indirect, special, consequential, or incidental losses
or damages whatsoever arising from or in connection with use of the
Information; and (ii) any direct or compensatory damages caused to any person
or entity, including but not limited to by any negligence (but excluding fraud
or any other type of liability that by law cannot be excluded) on the part of
Moody’s or any of its directors, officers, employees, agents, representatives,
licensors or suppliers, arising from or in connection with use of the
4. You agree to read [and
be bound by] the more detailed disclosures regarding Moody’s ratings and the
limitations of Moody’s liability included in the Information.
5. You agree that any disputes relating to this agreement or your use of
the Information, whether sounding in contract, tort, statute or otherwise,
shall be governed by the laws of the State of New York and shall be subject to
the exclusive jurisdiction of the courts of the State of New York located in
the City and County of New York, Borough of Manhattan.
05 May 2004
MOODY'S ASSIGNS B3 RATING TO PRIMEDIA'S PROPOSED $275 MILLION NOTES
Approximately $1.7 Billion in Debt Securities Affected
New York, May 05, 2004 --
Moody's Investors Service has assigned a B3 rating to PRIMEDIA's
proposed $275 million Floating Rate Notes due 2010. All
other ratings are confirmed, including PRIMEDIA's
$300 million of 8.0% senior notes due 2013 -
$475 million of 8.875% senior notes due 2011 -
$225 million of 7.625% senior notes due 2008 -
$167 million of Series D 10.0% exchangeable preferred
stock due 2008- Ca
$95 million of Series F 9.2% exchangeable preferred
stock due 2009 - Ca
$212 million of Series H 8.625% exchangeable preferred
stock - Ca
Senior Implied Rating - B3
Senior Unsecured Issuer Rating - Caa2
Speculative Grade Liquidity Rating - SGL-3
Rating Outlook -- Stable
The ratings reflect PRIMEDIA's high leverage and historical inability
to generate positive cash flow after payment of dividends and preferred
stock repurchases. In addition the ratings incorporate Moody's
view of the relatively poor visibility provided to creditors, weak
growth prospects in PRIMEDIA's enthusiast, business information,
and educational television businesses, and marginal asset protection
metrics, especially as afforded to preferred stockholders.
The stable outlook indicates Moody's expectation of reduced event
risk, following an extremely active period of business activity,
characterized by acquisitions in 2000 and 2001, followed by dispositions
totaling close to $600 million since late 2001. Moody's
expects that the pace of dispositions will continue, but at a reduced
rate. The stable outlook also reflects the company's progress
towards attaining positive retained cash flow results, as well as
its adequate liquidity position.
Since year-end 2001, PRIMEDIA has exchanged approximately
$88 million of preferred stock into common stock. During
2003 the company repurchased approximately $25 million of common
stock which had been exchanged for preferred stock. The preferred
Series D, F and H stock is largely held by PRIMEDIA's controlling
shareholder, KKR. The Series J preferred stock is completely
owned by KKR.
PRIMEDIA intends to use the proceeds of the proposed $275 million
in FRNs (1) to redeem its $175 million Series J preferred stock
(subject to approval of independent directors)and (2) to retire up to
$100 million in term loans outstanding under its bank credit facility.
PRIMEDIA will retire an additional $50 million of term loans through
drawings under its revolving bank credit facility. The size of
the revolving credit facility will be permanently reduced by $21
Virtually all of PRIMEDIA's senior debt, is ranked pari-passu
in right of payment with its senior secured credit facility. All
senior debt is guaranteed on a senior unsecured basis by the restricted
group of operating subsidiaries and is secured by a pledge of intermediate
holding company stock. The proposed FRNs will also be ranked pari-passu
with PRIMEDIA's bank loans as well as with its senior notes.
Accordingly the substitution of approximately $100 million in FRNs
for term loan debt represents a like-kind refinancing of debt and
is neutral from a ranking perspective.
The proposed redemption will not increase total leverage (defined as total
debt and preferred stock to EBITDA), nevertheless the substitution
of approximately $175 million in FRNs for a like amount of preferred
stock places pressure on the ratings. The redemption will substantially
reduce the amount of outstanding preferred stock, which currently
provides a loss absorption cushion to senior debt holders. In addition
the substitution of a cash interest-paying instrument for a non-cash
PIK preferred dividend, will worsen the company's cash interest
expense burden. However, Moody's considers that the pressure
on the ratings has only a modest impact on the default risk and anticipated
loss severity to senior debtholders and is insufficient to warrant a downgrade
from current rating levels.
Ratings are supported by recent improvements in liquidity derived from
the cash proceeds of an extensive asset sales program, the value
and severability ascribed to PRIMEDIA's remaining portfolio of titles,
and management's demonstrated track record of monetizing individual
properties as necessary, in relatively short order and at attractive
prices. In addition the ratings recognize the company's significant
reduction of debt and leverage since 2001, and the success of the
company's balance sheet initiatives, which have pushed out
the next significant maturity date until 2008.
At the end of December 2003, PRIMEDIA recorded leverage (total debt
plus preferred stock to consolidated EBITDA) of 8.8 times consolidated
EBITDA. Moody's considers that many of PRIMEDIA's marquee
names have now been sold and that its remaining stable of titles may lack
sufficient value to assure full recovery of all debt and preferred shareholder
obligations in a distress scenario.
PRIMEDIA continues to generate negative retained cash flow, however
Moody's expects that this will turn positive in 2004, due
largely to the anticipated non-recurrence of restructuring and
integration costs which hampered the attainment of positive results in
PRIMEDIA continues to face a soft sales environment, as advertising
revenues, especially from business-to-business advertising,
suffer from a prolonged economic downturn. However, largely
as a result of cost cutting measures, the company has experienced
substantial EBITDA growth during the past year.
The ratings incorporate PRIMEDIA's leadership position in the enthusiast
media, consumer guides, and business information segments
, each of which provide for a high degree of targeted "endemic"
advertising and subscriber loyalty.
PRIMEDIA's liquidity should be adequate to fund the company's cash
needs over the coming year, as reflected in the SGL-3 liquidity
rating assignment. Covenants under the bank credit facility are
governed by the performance of PRIMEDIA's restricted group,
rather than by the (substantially lower) EBITDA results of the company's
consolidated operations. Although the terms and conditions of the
credit agreement appear to afford considerable financial latitude to PRIMEDIA,
it is significant that the company amended its financial covenants in
2003 and will need to loosen them again in 2004, in order to accommodate
the proposed transaction.
The SGL-3 rating reflects PRIMEDIA's adequate liquidity position,
which pro-forma for the proposed financing will stand at $265
million, including cash and marketable securities of $19
million and bank revolver availability of $246 million at 3/31/2004.
Moody's considers this level of liquidity is adequate to support
the company's moderate level of cash burn (defined as cash from
operations after capital expeditures and preferred dividends), which
totaled $10 million for the fiscal year ended December 31,
2003. Moody's expects that PRIMEDIA's liquidity position
should modestly improve in the fiscal year 2004 as the company turns retained
cash flow positive. PRIMEDIA does have back door alternatives to
increase liquidity, however, Moody's questions whether PRIMEDIA's
remaining titles (especially some of the languishing business to business
titles) can command as high a sales multiple as achieved on its more recently
In Moody's opinion, PRIMEDIA's remaining assets provide
bank lenders and bondholders with adequate asset coverage; however,
preferred stockholder interests, in particular, may be compromised
in a distress scenario. Accordingly, the preferred stock
is rated four notches below the senior implied rating.
New York City-based PRIMEDIA Inc. is a media company providing
targeted content for both the consumer and business-to-business
sectors. The company is a specialty magazine publisher and a producer
and distributor of specialty video products.
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
Senior Vice President
Corporate Finance Group
Moody's Investors Service
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.
Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.