Fitch puts Cablevision on negative watch

Fitch Ratings said it placed the ratings of Cablevision Systems Corp. and its wholly owned subsidiary CSC Holdings, Inc. on Rating Watch negative, including the B+ issuer default ratings, Cablevision's CCC+ senior unsecured debt rating with a recovery rating of RR6 and CSC Holdings' BB/RR1 secured bank facility and BB-/RR3 senior unsecured debt.

The negative watch follows the announcement that the Dolan family has offered to buy out the public shareholders of Cablevision for $27 a share. It has been reported that the Dolan family does not intend to pursue their offer without the consent of Cablevision's special committee, which will review the fairness of the offer.

If consent is given by the special committee, Fitch believes that the Dolan family will be successful and that the existing covenants associated with the credit facility and senior notes will allow for leverage to increase dramatically to fund the buyout. The senior notes at CSC Holdings have a debt incurrence limitation at 9x leverage.

It is expected that the Dolans will in part fund the buyout with their Cablevision share ownership, which is valued at $1.7 billion. Fitch predicted that the remaining portion of the buyout will result in an increase in leverage to between 8x and 9x.

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