S&P lowers ServiceMaster

Standard & Poor's said it lowered its ratings on The ServiceMaster Co., including its corporate credit rating to BB+ from BBB-.

All ratings remain on CreditWatch with negative implications, where they were placed on Nov. 28, following an announcement that the company's board of directors had decided to explore strategic alternatives to maximize value for shareholders, including the possible sale of the company, the agency said.

The downgrade reflects S&P's assessment that ServiceMaster no longer possesses an investment-grade financial policy following today's announcement that it has entered into a definitive merger agreement to be acquired by an investment group led by Clayton Dubilier & Rice Inc. for $15.625 per share, plus the assumption of $760 million of existing debt in a transaction valued at $5.5 billion.

The ongoing CreditWatch listing reflects the agency's expectation that leverage for ServiceMaster will increase substantially after effecting the acquisition.

While financing details have yet to be disclosed, a significant amount of the transaction will be financed with debt and the corporate credit rating is likely to fall to the B rating category, S&P noted.

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