S&P rates LBI Media notes B-

Standard & Poor's said it assigned LBI Media Inc.'s proposed first-lien senior secured notes due 2019 a B- issue-level rating. The recovery rating on this debt is 3, indicating the expectation of meaningful (50% to 70%) recovery in the event of a payment default.

S&P affirmed LBI Media's B- corporate credit rating.

The outlook is stable.

The ratings reflect the expectation that EBITDA coverage of interest will remain thin pro forma for the transaction and that the company will continue to generate negative discretionary cash flow in 2011 on account of higher interest expense and the continued ramp-up in the Estrella TV network, the agency said.

The ratings also consider that the company will have adequate liquidity over the next 12 to 18 months provided by full availability under the proposed $50 million revolving credit facility, the agency said.

The ratings also consider the company's highly leveraged capital structure, cash flow concentration in a small number of large U.S. Hispanic markets, intense competition for audiences and advertisers from much larger rivals, and financial risk associated with launching a startup operation while pursuing debt-financed acquisitions, S&P said.

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