S&P downgrades Muzak

Standard & Poor's said it lowered its corporate credit ratings on Muzak Holdings LLC and Muzak LLC, which are analyzed on a consolidated basis, to B- from B, and placed all of the company's ratings on CreditWatch negative.

The downgrade and CreditWatch listing are the result of Muzak's continued earnings underperformance and significant concerns about its liquidity, S&P said.

Key credit measures are strained with lease-adjusted debt plus the liquidation value of preferred stock of about 8x and lease-adjusted EBITDA coverage of interest plus pay-in-kind dividends of only about 1.1x.

S&P lowered Muzak Holdings' corporate credit rating to B- from B and its senior unsecured rating to CCC from CCC+. Muzak's corporate credit rating was lowered to B- from B, senior secured bank rating to B from B+, senior unsecured rating to CCC from CCC+ and its subordinated rating to CCC from CCC+.

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