Moody's may lower SBS Broadcasting

Moody's Investors Service said it placed the Ba2 corporate family rating of SBS Broadcasting SA on review for possible downgrade following the recent announcement that the company has entered into a definitive agreement to be acquired by funds advised by Permira and Kohlberg Kravis Roberts.

While the acquisition is subject to competition clearance and must be approved prior to closing by two-thirds of the votes cast by SBS shareholders, Moody's noted that the transaction has received unanimous board approval and that SBS shareholders representing a minimum of 21.9% of the total outstanding common shares of SBS have entered into agreements to vote in favor of the transaction.

Furthermore, SBS has agreed to pay Permira and KKR liquidated damages of €50 million if SBS is acquired by another purchaser prior to May 21, 2006.

Moody's said it expects that a successful completion of the acquisition by Permira and KKR would increase SBS' leverage above the current level of c. 3x such that SBS's financial profile would no longer be consistent with the Ba2 rating level.

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