S&P lowers Postmedia, rates notes B+

Standard & Poor's said it lowered the long-term corporate credit rating on Postmedia Network Inc. to B- from B, along with the company's senior secured first-lien term loan to B+ from BB-.

The outlook is stable.

The agency also said it lowered the rating on The 1 recovery rating on the debt is unchanged.

S&P also said it lowered the rating on Postmedia's senior secured second-lien notes to CCC+ from B-. The recovery rating on the debt is unchanged at 5.

The agency also said assigned a B+ rating and 1 recovery rating to Postmedia's proposed C$250 million senior secured first-lien notes due 2017.

The agency said it bases the downgrade on a view that Postmedia's operating performance will remain weak in fiscal 2013.

The company's most recent financial results included declines in reported revenue and operating income, S&P said.

The company plans to refinance the first-lien term debt with the new first-lien notes, which will provide Postmedia with more flexibility in several ways, including lowering mandatory principal payments, removing maintenance financial covenants, providing the ability to prepay both the first-lien and more expensive second-lien debt and extending the maturity date, S&P said.

The ratings also consider the company's vulnerable business risk profile and highly leveraged financial risk profile, the agency said.

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