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04 Oct 2005
MOODY'S PLACES ALL RATINGS OF R. H. DONNELLEY AND DEX MEDIA ON REVIEW FOR POSSIBLE DOWNGRADE
Approximately $8.4 Billion of Debt Securities Affected
New York, October 04, 2005 -- Moody's Investors Service has placed all ratings of R.
H. Donnelley Inc. and Dex Media, Inc. on review
for possible downgrade. Details of the rating actions are outlined
Ratings placed on review for possible downgrade:
R.H. Donnelley Inc.'s
$175 million senior secured revolving credit facility, due
2009 -- Ba3
$544 million senior secured tranche A term loan due 2009 --
$1,433 million senior secured tranche D term loan,
due 2011 -- Ba3
$325 million 8 7/8% senior notes, due 2010 --
$600 million 10 7/8% subordinated notes, due 2012
R.H. Donnelley Corporation's
$300 million senior unsecured notes, due 2013 --
Corporate Family rating -- Ba3
Dex Media, Inc.'s
$570 million 9% senior discount notes, due 2013 --
$500 million 8% cash pay unsecured notes, due 2013
Corporate Family rating -- Ba3
Dex Media East LLC
$916 million senior secured credit facility -- Ba2
$450 million 9.875% senior unsecured notes,
due 2009 -- B1
$341 million 12.125% senior subordinated notes,
due 2012 -- B2
Dex Media West LLC
$1,409 million senior secured credit facility --
$385 million 8.5% senior unsecured notes, due
2010 -- B1
$300 million 5 7/8% senior unsecured notes, due 2011--
$762 million 9.875% senior subordinated notes,
due 2013 -- B2
The rating action follows the companies' announcement that R.
H. Donnelley has entered into a definitive agreement to acquire
Dex Media, Inc. (Dex) in a transaction valued at approximately
$9.5 billion, including $2.4 billion
in stock, $1.8 billion in cash, and the assumption
of approximately $5.5 billion in Dex's debt,
in a transaction which is expected to close by the end of March 2006.
The review will assess (1) the burden which the increased debt will place
on the merged companies' financial profile, (2) the pro-forma
capital structure of R.H. Donnelley following the merger,
(3) the allocation of debt among the merged entity's issuers, and
(4) whether the acquisition will receive shareholder and regulatory approval
and close in accordance with the announced terms and conditions.
In addition, the review will examine the combined companies'
ability to achieve synergies and attain targeted operational growth and
financial improvement post acquisition.
R.H. Donnelley has announced no specific detail regarding
the expected capital structure of the surviving entity, although
it has indicated its preference to maintain existing debt issues in place.
However, Moody's expects that the five currently-rated issuers,
R.H.Donnelley Corporation, R.H. Donnelley
Inc., Dex Media, Inc., Dex Media East
LLC, and Dex Media West LLC, will each remain as separate
issuers, supporting, as yet, unspecified amounts of
debt. Moody's expects that its review will focus particularly upon
the notching implications of the surviving corporate structure.
Ratings on the surviving entity's debt are expected to encompass a relatively
wide range of ratings according to the structural and contractual ranking
of each debt instrument, as well as the direct and indirect cash
flows available to each issuer. Moody's notes that prior to this
review, a four notch differential existed between the Ba2 rating
on Dex Media East LLC's senior secured credit facility and the B3 rating
on R.H. Donnelley Corporation's senior notes.
Headquartered in Cary, North Carolina, R.H.
Donnelley operates in 18 states with a total circulation of 28 million.
The company recorded pro-forma adjusted 2004 revenues of $1.0
Headquartered in Englewood, Colorado, Dex Media, Inc.
owns and operates incumbent directories in 14 states. The company
recorded 2004 revenues of $1.6 billion.
Andris G. Kalnins
Senior Vice President
Corporate Finance Group
Moody's Investors Service
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
No Related Data.
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