Fitch Affirms Nielsen's IDR at 'B'; Outlook Stable

CHICAGO--(Business Wire)--
Fitch Ratings has taken various actions on Nielsen Company B.V. (Nielsen) and
its subsidiaries' ratings as follows:

The Nielsen Company, B.V.

--Issuer Default Rating (IDR) affirmed at 'B';

--Short-term IDR affirmed at 'B';

--Senior unsecured notes (including EMTNs) downgraded to 'CC/RR6' from
'CCC/RR6'.

Nielsen Finance LLC and Nielsen Finance Co (NFL/NFC)

--Assigned an IDR of 'B';

--Assigned a short-term IDR of 'B';

--Senior secured term loan affirmed at 'BB-/RR2';

--Senior secured revolving credit facility affirmed at 'BB-/RR2';

--$500 million 11.5% senior unsecured notes due 2016 (issued in late April 2009)
rated 'CCC/RR6' (ranked pari-passu with other senior unsecured debt at NFL/NFC);

--Senior unsecured notes downgraded to 'CCC/RR6' from 'CCC+/RR6';

--Senior subordinated discount notes downgraded to 'CC/RR6' from 'CCC+/RR6'.

Approximately $9.5 billion in total face value of debt is affected. Certain
issue level ratings have also been revised (as described above) to align with
Fitch's rating definitions. The Rating Outlook is Stable.

Nielsen's ratings continue to reflect the following:

--Nielsen's has a relatively stable and well diversified revenue base. The
company generates significant recurring revenue; greater than 95% in some key
areas and 70-75% overall. This resiliency was exhibited during the challenging
fourth quarter of 2008 and first quarter of 2009 as year-over-year revenue
growth on a constant currency basis was 1% in each quarter (influenced slightly
but favorably by a modest amount of growth through acquisitions.) Diversity
stems from the broad number of clients the company serves (more than 25,000 in
its Media division alone), its multiple product-lines and the almost 50% of its
top-line derived from markets outside the U.S.;

--While not immune to competitive pressures and longer-term structural threats,
Fitch believes the company is in a strong position to defend and grow revenue in
its core businesses. In addition to sound growth prospects in its largest unit,
Consumer Services, Fitch believes there are meaningful opportunities for organic
growth in measuring and analyzing media consumption and spending globally. The
company has assembled solid platforms for measuring media consumption on the
three key screens (television, online and mobile);

--With its major cost initiatives reaching maturity, covenant EBITDA add-backs
winding down and the economic slowdown hindering top line growth (and associated
operating leverage), the meaningful percentage increases in EBITDA in recent
years will likely moderate. However, Fitch expects the company can continue to
grow EBITDA at least at a mid-single digits pace over the next several years (on
average);

--Fitch's credit ratings also incorporate competition for Nielsen's lucrative TV
ratings franchise; challenges facing its business-to-business magazines
(cyclical and secular) and trade show unit (predominantly cyclical); acquisition
risk; high leverage (unadjusted total face-value of debt to Fitch calculated
EBITDA of 8.0 times (x) (pro forma for recent debt activity) and covenant
leverage of 6.0x) and material refinancing risk in 2013 when $5 billion comes
due. The company's ability to access capital multiple times amid very strained
market conditions, bodes well for its capacity to manage refinancing risk.

Fitch believes Nielsen's liquidity is sufficient. Free cash Flow (FCF)
approached breakeven in 2008 (at approximately negative $50 million) but was
held back by a negative working capital swing (approximately $200 million) and
higher than normal capital expenditures ($370 million). Capital expenditures
should normalize in 2009 to less than $300 million as there will be fewer Local
People Meter (LPM) roll-outs; fewer one-time, client-specific platform
build-outs; and lower investment in rolling out the company's three-screen
strategy globally. Fitch notes that as of year-end 2008, the company's projected
pension benefit obligation is $1.2 billion compared to plan assets of $1
billion. Fitch expects pension contributions in 2009 to be manageable; roughly
equivalent to 2008 levels at approximately $40-50 million. On flat to slightly
pressured constant currency top-line growth, modest cost reductions, a negative
working capital swing similar to 2009 and more normalized capital expenditures,
Fitch expects FCF to be positive in the range of $10-$75 million in 2009. Fitch
anticipates that FCF will be predominantly dedicated toward debt repayment with
a modest amount potentially being dedicated to smaller acquisitions.

The company had cash of $410 million at March 31, 2009. The company also has
$388 million available on its $688 million senior secured revolver due in 2012.
The overall fixed/floating mix in the capital structure is approximately 80%/20%
and sufficiently mitigates floating interest rate risk. The company has been
active in managing its near-term maturities and they appear manageable over the
next several years. Excluding revolver drawings and bank overdrafts the company
faces only $35 million in maturities through the rest of 2009 (predominantly
bank amortization). Pro forma for the tender offer announced May 12, 2009, bank
amortization and EMTN maturities should total approximately $110 million in 2010
while approximately $90 million comes due in 2011.

As of March 31, 2009, adjusted for April 2009 financing activity, Nielsen has
total debt of $9.5 billion (face value). Fitch calculates leverage (including
the face value debt and a slightly more conservative interpretation of EBITDA)
of 8.0x compared to 6.0x computed by the company for the purposes of covenant
compliance. Fitch's recovery analysis assumes that the company would be
restructured at the point at which its EBITDA breaches its covenants
(approximately a 35% decline from LTM levels). In this scenario, Fitch estimates
the group could be sold for a distressed multiple of 6x Fitch-computed LTM
EBITDA yielding a distressed enterprise valuation of roughly $4.6 billion.

Fitch categorizes the company's debt into four distinct priorities, split among
two issuing entities. NFL/NFC's $5.9 billion (total capacity) senior secured
credit facilities are guaranteed by Nielsen and by all of the group's
wholly-owned U.S. subsidiaries. The loans are secured by substantially all of
the U.S. assets and by 100% of the equity of U.S. subsidiaries and 65% of the
equity of non-U.S. subsidiaries (some exceptions are noted). Fitch estimates
senior secured creditors could recover at the very low end (71%) of the 71-90%
range represented by an 'RR2' recovery rating. Fitch applies two notches for
'RR2' ratings, reflecting the 'BB-' rating on the senior secured. While Fitch
expects in our base-case for EBITDA to grow and secured debt to be paid down,
Fitch notes that a modest decline in our distressed EBITDA estimate or more
secured debt could pressure this recovery rating below the 'RR2' level.

Given that the senior secured is not fully recovered, Fitch estimates no
recovery ('RR6') for other classes of debt. The ratings reflect that the notes
issued by NFL/NFC benefit from a guarantee from the same subsidiaries that
guarantee the secured loans. Fitch notches the NFL/NFC senior unsecured notes
down two notches to 'CCC' to reflect its position relative to other debt in the
capital structure. While the subordinated notes ('CC/RR6') issued by NFL/NFC are
guaranteed by the same entities as the secured loans and senior notes, Fitch
distinguishes them from the senior unsecured given their junior position. The
company also has approximately $670 million of debt (pro forma for recent
refinancing actions and offers) outstanding at Nielsen Company B.V. which
includes senior discount notes issued as part of the LBO and also legacy VNU
debt that was rolled in the transaction. Fitch views these notes as pari-passu
with one another and recognizes they are structurally subordinate to all NFL/NFC
debt as they do not benefit from any guarantees or security. Fitch notes they
are reliant on the Nielsen's subsidiaries to upstream dividends for refinancings
and interest payments. While they rank after the NFL/NFC subordinate notes, they
carry the same 'CC/RR6' because ratings on low priority debt typically
compresses to a maximum of three notches from the IDR (given the similarly low
likelihood of any recovery).

Going forward the most likely drivers of rating pressure include: a material
debt funded acquisition, a coercive debt exchange which included a material
reduction in terms for bondholders or if credit market conditions permitted an
attempt by private equity sponsors over the next several years to extract
capital through a leveraged dividend.

Conversely, while there could be one-notch of potential rating upside if the
company continues to delever, an upgrade outside of the 'B' category would
require strong commitment to tighter leverage measures and Fitch's belief that
achievement and maintenance of those metrics would be realistic over time.
Fitch's 'B' IDR considers Nielsen's entire debt load, and Fitch believes the
company will need to build financial flexibility (liquidity enhancements and
leverage reductions) in order to manage refinancing risk in 2013. Fitch is
cautious that intermediate term improvements in the leverage or liquidity
profile may not ultimately accrue to all creditors but could be exhausted over
time via the refinancing or the exit strategy the company's private equity
owners may pursue.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site. The issuer did not participate in the rating
process other than through the medium of its public disclosure.

Fitch Ratings
Rolando Larrondo, +1-212-908-9189 (New York)
Mike Simonton, CFA, +1-312-368-3138 (Chicago)
Cindy Stoller, +1-212-908-0526
(Media Relations, New York)
cindy.stoller@fitchratings.com

Copyright Business Wire 2009