Moody's Investors Service has placed the debt ratings for The Ackerley Group on review for possible upgrade following the announcement that Clear Channel Communications is set to acquire the media company for $497 million in stock plus the assumption of all of Ackerley's debt. The rating review affects the $120 million senior secured credit facilities rated Ba3 and $200 million senior subordinated notes rated B3. Moody's expects Clear Channel to refinance Ackerley's bank debt and leave the bonds outstanding. Ackerley recently completed the $120 million facility led by Credit Suisse First Boston. Given Clear Channel's notably higher ratings and long history operating broadcasting assets, Ackerley's notes are also likely to be upgraded. Dan Evans, Jr., v.p., public affairs for Ackerley did not return calls.
* Fifteen lodging and leisure related companies are on review for possible downgrade by Moody's since Sept. 11 including Extended Stay of America, Lodgian and Sunburst Hospitality. Leisure related ratings on review consist of American Skiing Company, Intrawest and Sun International Hotels among others. The gaming credits are Boyd Gaming, Eldorado Resorts, Isle of Capri Casino and Venetian Casino Resorts.
There is a high degree of uncertainty regarding the longer-term impact of the tragedy last month, but a number of credits are at immediate risk. The companies on review for downgrade are those with debt levels too high for their current rating or those required to sell assets or operations to improve liquidity profiles. Additionally, companies with a heavy reliance on airlines and cruise ships to bring customers in and those that pursue share repurchase programs at the expense of credit quality are being watched.
* Moody's has downgraded Pentacon's credit facility and senior subordinated note ratings. The $100 million revolver has been downgraded to B3 from B1 and the $100 million senior subordinated notes due 2009 to Ca from Caa1. Pentacon not making a $6.13 million interest payment on its sub notes precipitates the action. Pentacon is a distributor of fasteners and other small parts and a provider of related inventory procurement and management services to OEMs. The company has a 30-day grace period to make the missed payment before it is classed a default event. The maturity of the company's indebtedness could be accelerated as a result. The ratings also reflect poor operating performance since 2000 with anticipated further decline this year. The company is planning to explore financial restructuring with its lenders and is revisiting its business plan. Questions were referred to Jim Jackson, controller, who did not return calls.