S&P gives MediaoOean loans B, CCC+

Standard & Poor's said it assigned its preliminary B corporate credit rating to MediaOcean LLC.

The outlook is stable.

At the same time, the agency assigned its preliminary B issue-level rating and preliminary 3 recovery rating to the company's proposed $20 million revolving credit facility due 2020 and $225 million first-lien term loan due 2022. The preliminary 3 recovery rating indicates an expectation for meaningful recovery (50%-70%; upper half of the range) of principal in the event of a payment default.

S&P also assigned its preliminary CCC+ issue-level rating and preliminary 6 recovery rating to the company's proposed $90 million second-lien term loan due 2023. The preliminary 6 recovery rating indicates our expectation for negligible recovery (0%-10%) of principal in the event of payment default.

"The preliminary B corporate credit rating on MediaoOean reflects the company's small revenue base and very high pro forma high debt leverage," S&P credit analyst Heidi Zhang said in a news release.

Excluding projected cost savings, pro forma adjusted debt leverage was greater than 10 times (or in the mid-7 times area including projected cost savings) as of March 31. This is minimally offset by MediaoOean’s long-term relationship with its major ad agency holding companies, the agency’s expectation for moderate positive discretionary cash flow in 2016 and the company's "adequate" liquidity.

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