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Announcement:

Moody's says that NBC Universal's acquisition of Blackstone's 50% stake in Universal Orlando, and its plan to guarantee its debt will not impact NBCU's credit ratings

01 Jul 2011

New York, July 01, 2011 -- Moody's Investors Service said that NBCUniversal Media, LLC's ("NBCU"; Baa2, stable outlook) announced acquisition of Blackstone Capital Partners' ("Blackstone") 50% equity interest in Universal City Development Partners Ltd ("Universal Orlando"; Baa2 senior unsecured), and its plan to guarantee its debt will not impact NBCU's credit ratings. The purchase price of approximately $1 billion was financed using NBCU's available cash on hand, borrowings under NBCU's existing revolver and a $250 million subordinated loan from Comcast Corporation ("Comcast"; Baa1 senior unsecured). The acquisition closed earlier today, July 1, 2011, following which NBCU will own 100% of Universal Orlando.

NBCU addressed its plan for Universal Orlando's debt and any impact on NBCU's long-term capital structure. Concurrent with the transaction, Universal Orlando is retiring its outstanding bank facility using its cash on hand and a $600 million 5-year unsecured intercompany loan from NBCU. It also intends to redeem 35% of its notes (currently comprising $400 million of Senior Notes and $225 million of Senior Subordinated Notes) using proceeds from a $240 million equity offering to NBCU (which will be funded by NBCU's revolver and cash on hand). NBCU also announced today that it expects to offer a full and unconditional guarantee of Universal Orlando's residual outstanding notes to bondholders in return for their consent to amendments to the terms of the notes to conform the covenants and events of default to those contained in NBCU's bond indenture. NBCU's guarantee is conditioned on holders of at least 50% of both of the notes approving the indenture amendments, which is a threshold that Moody's believes will be easily exceeded. Universal Orlando's notes will be pari passu with NBCU's outstanding senior unsecured debt securities, although they will have some structural seniority based on the downstream nature of the guarantee, whereby NBCU debt holders do not benefit from a similar upstream guarantee from Universal Orlando. However, we believe that the impact of such structural seniority is not material, and we believe will be eliminated in the not too distant future when NBCU refinances Universal Orlando's notes (redeemable beginning November 2012), as we anticipate the company will seek to reduce its borrowing costs. Moody's anticipates that NBCU will simplify its capital structure over the next few years, and will accommodate any debt related to Universal Orlando as part of its own long-term debt capital structure.

"We believe full ownership of Universal Orlando by NBCU, which owns or receives license fees for other Universal branded theme parks around the world, rather than the 50-50 joint venture clarifies the long-term strategic importance of the company to NBCU," stated Neil Begley, a Moody's Senior Vice President. The transaction will not materially impact NBCU's leverage, with pro forma leverage (on a consolidated basis as of LTM 3/31/2011) of around 3.07x (including Moody's standard adjustments and pro forma for a full year contribution of Comcast cable channels to NBCU), only slightly higher than its standalone 2.95x leverage. "We anticipate that the company will use free cash flow to reduce debt, which together with the redemption of 35% of Universal Orlando's notes will cause leverage to decline rapidly to under 3.0x within 12 months, which is consistent with its Baa2 credit rating," added Begley.

For further information please see the issuer comment posted to www.moodys.com.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The principal methodology used in rating NBCU was Moody's Global Diversified Media Industry rating methodology, published in December 2010. Universal Orlando's ratings were assigned by evaluating factors we believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of Universal Orlando's core industry and Universal Orlando's ratings are believed to be comparable to those of other issuers of similar credit risk.

NBCUniversal Media LLC, with its headquarters in New York, New York, is a jointly owned company by Comcast and GE that is a diversified media content company comprised of cable and broadcast networks, broadcast television stations, a film studio and theme parks.

Universal Orlando, headquartered in Orlando Florida, operates the Universal Studios Florida and Universal Islands of Adventure theme parks, and Universal CityWalk Orlando, a dining, retail and entertainment complex.

New York
Neil Begley
Senior Vice President
Corporate Finance Group
Moody's Investors Service, Inc.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
John Diaz
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service, Inc.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's says that NBC Universal's acquisition of Blackstone's 50% stake in Universal Orlando, and its plan to guarantee its debt will not impact NBCU's credit ratings
No Related Data.
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