S&P lowers LBI Media

Standard & Poor's said it lowered the corporate credit rating on LBI Media Inc. to selective default (SD) from CC.

The issue-level rating on the company's 8½% senior subordinated notes due 2017 was lowered to D from CC and the recovery rating on this debt remains unchanged at 6, which indicates 0% to 10% expected default recovery.

The issue-level rating on the company's 9¼% senior secured notes due 2019 remains CCC. The recovery rating on this debt remains unchanged at 3, indicating 50% to 70% expected recovery.

The downgrades follow news that the company completed an exchange transaction Dec. 31, said Minesh Patel, an S&P analyst. Under the agency's criteria, the analyst said it considers debt exchanges of highly leveraged issuers as tantamount to a default.

Although the exchange transaction was not a significant deleveraging event, the post-exchange capital structure provides the company the flexibility to reduce cash flow deficits by paying interest in-kind on its new exchanged debt, the agency said, and by reduces October 2013 debt maturities to about $11 million from $41.8 million.

However, S&P said it estimates that cash flow deficits will persist.

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