TEXT-S&P rates Walt Disney Co proposed benchmark issuance 'A'
Nov 27 - Standard & Poor's Ratings Services said today that it assigned Burbank, Calif.-based entertainment conglomerate The Walt Disney Co.'s proposed benchmark issuance of three-, five-, 10-, and 30-year debt its 'A' issue-level rating. The company will use the proceeds of the issuance for general corporate purposes, which could include the repayment of near-term debt maturities including commercial paper or to be able to finance the purchase of Lucasfilm. We estimate the impact of this issuance on Disney's leverage metrics will be about 0.2x, even assuming the entire amount of debt is incremental. This would bring the company's fully adjusted debt-to-EBITDA ratio to about 1.9x from 1.6x as of Sept 30, 2012, pro forma for the Lucasfilm acquisition. While still within our 2x adjusted leverage threshold for Disney at an 'A' rating, the company currently has limited room for economy-related underperformance, operational missteps, or further large debt-financed acquisitions. Standard & Poor's Ratings Services' A/Stable/A-1 corporate credit rating on Walt Disney Co. incorporates Disney's leading, wide-ranging creative franchises and distribution capability, underpinning our assessment of its business risk profile as "strong," based on our criteria. Disney's financial risk profile is "modest," based on a fully adjusted debt-to-EBITDA ratio of less than our 2.0x threshold for the 'A' rating, good cash-flow generating ability, exceptional liquidity, and a financial policy balancing conservative credit metrics with shareholder-friendly initiatives and acquisitions. The stable rating outlook reflects our view that Disney's business performance will remain strong, particularly at the cable networks, that management will maintain its current financial policy, and there will no further large debt-financed acquisitions. RELATEED CRITERIA AND RESEARCH -- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012 -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011 -- Use Of CreditWatch And Outlooks, Sept. 14, 2009 -- Criteria Guidelines For Recovery Ratings, Aug. 10, 2009 -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 -- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008 Ratings List The Walt Disney Co. Corporate credit rating A/Stable/A-1 Rating Assigned Proposed debt A Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.