Moody's cuts Millennium New Jersey

Moody's Investors Service said it downgraded Millennium New Jersey Holdco, LLC's corporate family and probability-of-default ratings to Caa2 from B3, senior secured first-lien bank credit facility to Caa1 (LGD3, 37%) from B2 and senior secured second-lien bank credit facility to Ca (LGD5, 89%) from Caa2.

The ratings were placed under review for further possible downgrade.

Moody's September downgrade of Millennium's ratings incorporated its expectation that the fourth-quarter compliance certificate, which management must provide to lenders by the end of March, will show a breach of the maximum leverage covenant within Millennium's first-lien credit agreement. The agency said the passage of time with no resolution, as well as expectations that cash flow will deteriorate in 2009 due to continued declines in advertising spending, prompted the latest downgrade.

The Caa2 corporate family rating reflects the agency's expectations that Millennium's leverage will rise from an already high 8 times debt-to-EBITDA due to cyclical and secular pressures facing the radio industry as well as the company's geographic concentration and lack of scale.

Strong EBITDA margins (in the mid 40% range) and Millennium's leading positions in its targeted markets support the ratings, Moody's said.

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