DBRS Downgrades YLO to Pfd-5(low) Trend Negative

DBRS has announced that it:

has today downgraded Yellow Media Inc.’s (Yellow Media or the Company) Issuer Rating to B (high) from BB; its Medium-Term Notes to B (high) from BB, with an RR4 recovery rating; its Exchangeable Subordinated Debentures to B (low) from B (high), with an RR6 recovery rating; and its Cumulative Preferred Shares to Pfd-5 (low) from Pfd-4 (low). The trend on all ratings remains Negative.

Today’s downgrade reflects recent actions taken by Yellow Media that may indicate that its business transformation may take longer than previously anticipated, while its debt maturities over the medium term remain significant. DBRS believes that this may greatly restrict the Company’s ability to handle its maturing debt by means of internally generated free cash flow and, potentially, by drawing on external sources.

DBRS also notes that drawing on its revolving credit facility precludes Yellow Media from repurchasing up to $125 million of its 2013 debt maturities in the open market, as would have been allowable under its September 2011 amended credit agreement.

The Negative trend reflects the possibility that Yellow Media’s ratings could be further downgraded should the Company undertake refinancing actions that would entail some form of compromise for its existing creditors. Additionally, DBRS remains concerned that the digital transition may continue to take longer than currently anticipated and could include (1) accelerated pressure on Yellow Media’s traditional print business while digital revenue continues to grow but fails to compensate for print revenue pressure; and (2) further pressure on liquidity and free cash flow, rendering it insufficient to handle the Company’s sizable upcoming debt maturities.

YLO was last mentioned on PrefBlog in the post YLO Suspends Dividends. YLO has four issues of preferreds outstanding: YLO.PR.A and YLO.PR.B (OperatingRetractible) and YLO.PR.C and YLO.PR.D (FixedReset). All are tracked by HIMIPref™; all are relegated to the Scraps index on credit concerns.

2 Responses to “DBRS Downgrades YLO to Pfd-5(low) Trend Negative”

  1. […] YLO was last mentioned on PrefBlog in the post DBRS Downgrades YLO to Pfd-5(low) Trend Negative. […]

  2. […] can be ascribed to the suspension of dividends on these issues, followed by sharp downgrades from DBRS and S&P. Unitholders and casual readers will know that these issues have been a nightmare for […]

Leave a Reply

You must be logged in to post a comment.