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S&P may downgrade Cablevision
Standard & Poor's said its long-term ratings for Cablevision Systems Corp. remain on CreditWatch with negative implications, where they were placed June 20, including Cablevision's BB corporate credit rating and B+ senior unsecured debt rating; CSC Holdings Inc.'s BB- senior unsecured debt rating and B+ subordinated debt rating; and Rainbow National Services LLC's BB+ secured bank loan rating, B+ senior unsecured debt rating and B+ subordinated debt rating.
The B-2 short-term rating on the company remains on CreditWatch with developing implications.
The CreditWatch update follows Cablevision's Dec. 2 8-K filing in which the company said it is evaluating a new CSC Holdings Inc. credit facility of up to $5.5 billion, secured by the stock of selected subsidiaries, the agency said.
S&P said the new credit facility would be used to refund and replace the existing CSC Holdings credit facility, provide the funds for the potential $3 billion special dividend and provide for up to $1.0 billion of initially undrawn revolving credit availability.
The outlook is expected to be negative, reflecting the significant increase in leverage due to the potential dividend, which would delay the previously anticipated improvement in Cablevision's financial profile due to ongoing growth in operating cash flows from its cable TV and other businesses, the agency said.
The ratings reflect Cablevision's aggressive financial policy, with debt to EBITDA (pro forma for the potential special dividend payment) expected to be around 7.7x, partially offset by the high investment-grade business risk characteristics of the company's cable TV business, the agency said.
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