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Moody's downgrades LBI Media
Moody's Investors Service said it downgraded LBI Media, Inc.'s corporate family and probability-of-default ratings to Caa1 from B2, senior subordinated bonds to Caa2 (LGD5, 74%) from B3 (LGD4, 69%) and senior secured bank credit facility to B1 (LGD2, 22%) from Ba2 (LGD2, 19%).
The outlook remains negative.
The downgrades reflect Moody's expectation that LBI's credit profile will weaken further and more significantly then previously anticipated in 2009 due to declines in advertising spending resulting from continued softening of the U.S. economy.
The agency believes that external liquidity from LBI's $150 million revolving credit facility and ample cushion under its bank facility's one financial covenant position will allow the company to manage the cyclical downturn well. But in the medium-to-longer term, Moody's said the projected double-digit leverage and weak fixed charge coverage suggest a potentially untenable capital structure and correspondingly heightened credit risk.
The adjusted debt-to-EBITDA ratio is about 9.3 times.
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