S&P: Time Warner on watch

Standard & Poor’s said it placed the BBB corporate credit rating on Time Warner Cable Inc. on CreditWatch with negative implications.

The negative watch follows news that Time Warner entered into a definitive agreement to be acquired by Charter Communications Inc. for $195 per share or about $56.7 billion equity valuation, S&P said.

The agency also said it placed the BBB ratings on Time Warner’s senior unsecured debt on CreditWatch with negative implications.

While details on the mix of new secured and unsecured debt are not public, the agency said it expects to rate the company’s existing debt no lower than BBB- based on a worst-case scenario analysis.

The agency also said it placed the company’s A-2 short-term rating on CreditWatch with negative implications.

The CreditWatch listing considers the potential for at least a two-notch downgrade of Time Warner following the transaction close, S&P said.

Going forward, the agency said it will view Time Warner as a core subsidiary of Charter and rate the companies on a consolidated basis.

S&P also said the BB- corporate credit rating on Charter remains on CreditWatch with positive implications, reflecting the potential for a two-notch upgrade if the acquisitions of Time Warner and Charter close under the proposed terms.

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