Here is some news on the potential debt CSN will "give" to Convergys with the spin off. If S & P can be believed expect $330 mill of debt to be given to Convergys. The next question that comes to mind is will any of the proceeds from the intial public offering be given to Convergys? Stay in touch.
Carey Thompson.
Monday June 1, 5:49 pm Eastern Time
S&P may raise Cincinnati Bell Inc ratings
(Press release provided by Standard & Poor's)
NEW YORK, June 1 - Standard & Poor's today placed its ratings on Cincinnati Bell Inc. (CBI)
and Cincinnati Bell Telephone Co. (CBT) on CreditWatch with positive implications reflecting the
planned spin off of its CBIS and MATRIXX Marketing subsidiaries to a new company
(Convergys).
About $1.1 billion of aggregate rated debt, is affected.
The spin-off of Convergys will result in CBI having a much more conservative balance sheet; near
term debt will be roughly half the previous level, at about $500 to $600 million.
Debt reduction results from approximately $425 million of expected initial public offering (IPO)
proceeds to CBI and spin off of about $330 million of debt with Convergys.
The spin off will occur roughly six months after completion of the IPO, and substantially enhances
the business risk profile of CBI.
The company will no longer be subject to the significant profit volatility and cash flow demands
associated with its outsourced marketing business that will be spun off, and will benefit from the
continued stability and strength of its core local telephone business.
The local telephone operation will comprise the bulk of the company's business mix, supplemented
with long distance telephone, directory publishing, telephone supply and PCS operations.
The wireless operation, representing a planned partnership with AT&T expected to close later this
year, will require CBI to fund $110 million for an 80% share in the venture, plus additional
requirements to cover its proportionate share of the joint venture's operating losses and capital
expenditures incurred by AT&T prior to closing.
Standard & Poor's will be meeting with management to review their strategies for CBI, including
potential acquisitions, business expansion and attendant financing requirements to resolve the current
CreditWatch. RATINGS PLACED ON CREDITWATCH Cincinnati Bell Inc.
Corporate credit rating A-/A-2
Senior unsecured debt A-
Commercial paper A-2
Bank loan A-
Cincinnati Bell Telephone Co.
Corporate credit rating A+
Senior unsecured debt A+ |
