Moody’s Investors Service has downgraded Spanish Broadcasting System (SBS)‘s probability of default rating (PDR) to D-PD from Caa3-PD.
The downgrade came following the company’s announcement that there was an event of default under the company’s note indenture following note maturity on April 15.
Additionally, SBS’s Corporate Family Rating is downgraded to Ca from Caa2; the senior secured notes rating is downgraded to Ca from Caa2; and the preferred stock rating is downgraded from Ca to C.
The outlook remains negative.
SBS’s “Ca” corporate family rating reflects an elevated expected loss rate following the recently announced default under the company’s 12.5% senior secured notes due April 2017.
The company announced the default in a 10K filing with the SEC made on April 20. In the filing, SBS noted that it has engaged financial and legal advisors in evaluating its recapitalization options. In addition, SBS has initiated conversations with representatives of the noteholders and holders of its preferred stock regarding the recapitalization.
“We view these actions as increasing the likelihood of a bankruptcy filing, with reduced expected recovery of proceeds to the noteholders,” Moody’s said.
Moody’s will withdraw all of SBS’s ratings shortly after this rating action, consistent with Moody’s practice for companies undergoing a debt restructuring, wherein the availability and flow of information becomes typically more limited.
The principal methodology used in these ratings was “Global Broadcast and Advertising Related Industries,” published in February 2017.
SBS owns and operates 17 radio stations in six of the eight largest Hispanic markets in the U.S., including New York and Los Angeles. The company also operates AIRE Radio Networks, a national radio platform, and MegaTV, a television operation with affiliates in the continental U.S. and Puerto Rico that includes owned-and-operated television stations in Miami and Houston.
Net revenue for 2016 totaled $145 million.
