Moody's may up Spanish Broadcasting

Moody's Investors Service said it placed the ratings for Spanish Broadcasting Systems Inc. on review for possible upgrade following the company's agreement to sell two Southern California radio stations for $120 million.

Moody's placed on review Spanish Broadcasting's B1 rating on $135 million senior secured bank credit facilities, Caa1 rating on the 9.625% senior subordinated notes due 2009, Caa2 rating on the 10.75% preferred stock, B2 senior implied rating and B3 senior unsecured issuer rating.

Cash on hand plus sale proceeds will provide the company with about $230 million for liquidity and debt reduction.

While Moody's said it expects the company to continue to fund acquisitions of top market radio stations with debt, any potential upgrade will be predicated on maintaining more prudent leverage levels in the future, thereby reducing the company's dependence on significant growth to achieve even modest cash flow coverage.

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