S&P trims Spanish Broadcasting preferred stock to D

Standard & Poor's said it lowered its issue-level rating on Spanish Broadcasting System Inc.'s preferred stock to D from CCC.

All of the existing ratings on the company, including the B- corporate credit rating and B- issue-level rating on the 12½% notes due 2017, remain unchanged. The outlook is negative.

S&P said its downgrade of Spanish Broadcasting System's preferred stock follows the company's announcement that it was unable to repurchase its 10¾% series B preferred stock when it was put to the company on Oct. 15. Failure to repurchase the preferred stock does not represent an event of default under the secured debt agreement as there are no cross default provisions but does trigger a voting rights event, and holders will be entitled to elect two new members to the board.

The event also prevents the company from incurring additional debt in the future, among other things, based on the indenture for the 12½% senior secured notes. If not remedied, the company will not be able to refinance its 12½% senior secured notes when they come due in 2017, barring an amendment of the preferred terms.

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