S&P might cut Quad/Graphics

S&P said it placed all its ratings, including the BB- issuer credit rating, on Quad/Graphics Inc. on CreditWatch with negative implications.

The CreditWatch placement follows Quad's announcement that it signed a definitive agreement to acquire LSC Communications Inc. through an all-stock transaction valuing the acquired company at $1.4 billion, including refinancing of LSC's debt, S&P said.

“We aim to resolve the negative CreditWatch before close of the acquisition after we speak with Quad's management and reassess our view on the company's business integration prospects, deleveraging plan, and financial policy,” the agency said in a news release.

“If we believe the acquisition would result in leverage remaining above 3.5x for a sustained period, likely from a prolonged integration or a more aggressive financial policy, we could lower the rating.

“Alternatively, we would affirm our ratings if we expect Quad's pro forma adjusted leverage will fall comfortably below 3.5x within 12-18 months of the acquisition.”

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