S&P lowers Gray Television debt, rates loan BB

S&P said it affirmed its B+ issuer credit rating on Gray Television Inc. and removed the rating and all issue-level ratings from CreditWatch, where S&P placed them with positive implications on June 25, 2018.

The outlook is stable.

At the same time, S&P assigned its BB issue-level and 1 recovery ratings to the company's proposed $200 million revolving credit facility due in 2023 and $2.15 billion incremental first-lien term loan due in 2025. The 1 recovery rating indicates an expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of payment default.

In addition, S&P said it lowered the issue-level ratings on the company's senior unsecured notes to B- from B+ and the recovery ratings to 6 from 4. The 6 recovery rating indicates an expectation for negligible recovery (0%-10%; rounded estimate: 0%) recovery in the event of payment default.

S&P will withdraw its rating on the existing revolving credit facility when the transaction closes.

“The ratings affirmation reflects our view that Gray's acquisition of Raycom Media improves the company's scale, operating leverage, and diversity,” S&P said in a news release.

“However, we expect the acquisition financing and integration costs will result in elevated average trailing-eight-quarters leverage in the high-5x to 6x range through 2019, up from 4.4x at the end of 2017.”

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