S&P puts Embarq on watch

S&P said it placed its rating on Embarq Corp.’s senior unsecured debt on CreditWatch with negative implications.

The placement follows the announcement that Apollo Global Management plans to buy Lumen Technologies Inc.’s local exchange carrier business in 20 states, the agency said. As part of the deal, Apollo will assume about $1.4 billion of unsecured debt issued by Lumen subsidiary Embarq, which will receive security.

“While the capital structure of the entity that Apollo is acquiring has not been disclosed, we expect that leverage under private equity ownership will be elevated relative to Lumen's current financial risk profile. Further, the risk associated with ongoing distributions to shareholders, coupled with secular industry declines and intense competition from the cable operators in these markets, will likely contribute to weaker overall credit quality over the long term,” S&P said in a press release.

S&P noted it could downgrade the debt by more than a notch.

The agency said it aims to resolve the CreditWatch when the deal closes.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.