Moody's: Muzak outlook developing

Moody's Investors Service said it changed the outlook for Muzak Holdings, LLC and its wholly owned subsidiary Muzak LLC to developing from negative.

The agency also affirmed Muzak Holdings' Caa1 corporate family and probability-of-default ratings and Caa3 (LGD6, 96%) 13% senior discount notes due 2010 and Muzak's Caa1 (LGD3, 45%) $220 million 10% senior unsecured notes due 2009 and Caa3 (LGD5, 86%) $115 million 9 7/8% senior subordinated notes due 2009.

The agency said the change in outlook follows the company's recent announcement that it is considering a future consolidation or combination with DMX, Inc., a major competitor. The combination would be contingent on a sale of the combined entity to an as yet unidentified third-party buyer following clearance by federal regulators.

In view of the preliminary nature of the merger, the forthcoming sales process and the pending Department of Justice approval, Moody's said there is considerable uncertainty with respect to whether the merger will in fact proceed.

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