S&P cuts Yell to BB on Transwestern acquisition
LONDON, May 17 (Reuters) - Credit ratings agency Standard & Poor's on Tuesday cut its ratings on Yell Group Plc (YELL.L: Quote, Profile, Research) by one notch to BB after the phone directory publisher agreed to buy U.S.-based Transwestern for $1.58 billion in cash.
S&P credit analyst Anna Overton said the price Yell was paying was 16 times TransWestern's 2004 earnings before interest, taxes, depreciation and amortisation (EBITDA).
As a result of the acquisition, Yell's total debt to EBITDA ratio is expected to be close to five times, up from slightly more than three times, S&P said.
The ratings agency warned that Yell's capacity to reduce financial leverage was limited by its substantial equity dividend commitments.
posted by New @ 7:38 AM
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