S&P lifts LBI Media, rates new notes CC

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

The agency also said it assigned an issuer rating of CCC to LBI Media Holdings Inc.

S&P also raised the rating on LBI's 8½% senior subordinated notes due 2017 to CC from D. The recovery rating on this debt remains unchanged at 6, indicating 0% to 10% expected default recovery.

The agency also assigned a CC rating to LBI's new pay-in-kind (PIK) toggle second-priority secured subordinated notes due 2020 and LBI Media Holding's new 11% senior notes due 2017. The notes were assigned a recovery rating of 6, indicating 0% to 10% expected default recovery.

The rating on the company's 10% senior secured notes due 2019 remains at CCC with the recovery rating unchanged at 3, indicating 50% to 70% expected default recovery.

The outlook is negative.

The upgrade reflects LBI's completion of its distressed-debt exchange, S&P said. The exchange reduced pro forma leverage as of Sept. 30, 2012 to 20.5x from about 23.5x, the agency said.

The ratings reflect LBI's unsustainable capital structure, its near-term liquidity and refinancing hurdles and an expectation of ongoing discretionary cash flow deficits, S&P said.

The negative outlook reflects execution risks relating to sales of KTCY-FM and LBI's Los Angeles real estate, the agency added.

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