Moody's may downgrade Source Media

Moody's Investors Service said it placed all the ratings of Source Media Inc. and Accuity LLC on review for possible downgrade, including the companies' B1 corporate family ratings and B2 probability-of-default ratings, Source Media's B1 (LGD3, 35%) $30 million senior secured revolver due 2009 and $88.5 million senior secured term loan B due 2010 and Accuity's B1 (LGD3, 35%) $5 million senior secured revolver due 2009 and $61.8 million senior secured term loan B due 2010.

The review reflects Moody's expectations that 2008 revenue and EBITDA are likely to be significantly lower than previous expectations, primarily as a result of a decline in advertising revenues in the companies' mortgage and technology markets.

Additionally, the agency said there is concern regarding the companies' ability to meet existing financial covenants under the credit facilities in light of management's revision of its forecasts combined with scheduled adjustments in covenant thresholds.

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