S&P raises LodgeNet outlook to stable, rates loan B+

Standard & Poor's said it revised its outlook on LodgeNet Entertainment Corp. to stable from negative, based on moderate improvement in the company's business profile after it acquires competitor On Command Corp., though it will have slightly higher debt leverage.

At the same time, the agency said it assigned a B+ bank loan rating, at the same level as the corporate credit rating, and a recovery rating of 2, to the company's proposed $450 million senior secured credit facility.

The facility consists of a $50 million revolving credit facility, a $75 million initial-draw term loan B and a $325 million delayed-draw term loan, the agency added, noting that the company will use proceeds of the initial-draw loan to repay existing indebtedness and proceeds of the $325 million delayed-draw term loan to acquire On Command.

According to S&P, the ratings reflect LodgeNet's exposure to the cyclical and seasonal lodging industry, our expectation that the company's substantial capital spending will continue to limit its discretionary cash flow and the limited size and long-term growth potential of this market niche.

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