By: E&P Staff Standard & Poor's Rating Services (S&P) lowered its ratings on Tribune Co. long-term and short-term debt Tuesday, saying the Chicago-based newspaper and other media company was in a weaker financial position because of its nearly $900 million tax payment stemming from a recent adverse U.S. Tax Court ruling.
"In addition, we expect that the company will not restore its financial profile to levels consistent with the former ratings in the intermediate term," S&P credit analyst Donald Wong said. The ratings service noted that Tribune generates "significant levels of cash flow after capital expenditures and dividends," but said it expected those funds to be used to draw down debt, repurchase stock, and make acquisitions or investments.
S&P cut Tribune's long-term corporate credit ratings to "A-minus," the seventh highest investment-grade rating, from "A." Its short-term rating was lowered to "A-2" from "A-1."
At the same time, S&P removed ratings from CreditWatch, where they were listed Sep. 28, with negative implications. The outlook is stable, the ratings service said.
S&P noted that Tribune has more than $3 billion of reported debt outstanding.
On Oct. 7, Fitch Ratings said Friday also downgraded Tribune Co.'s debt to "A-Minus," its seventh-highest rating, from "A." It also cited the Tax Court ruling in its announcement.
On Sept. 28, a Tax Court judge ruled that Tribune owed tax on a 1998 transaction between the old Times Mirror Co., which Tribune acquired in 2000, and Reed-Elsevier, which acquired the Matthew Binder legal publishing company.
Tribune said it will appeal the decision, but paid the federal portion of the tax bill, about $900 million, with money financed by issuing commercial paper.
Comments
No comments on this item Please log in to comment by clicking here