TEXT-Fitch publishes LBO scenario of Dun & Bradstreet
Dec 12 - Fitch Ratings notes that the Dun & Bradstreet Corp. (D&B) has not made any announcements regarding any strategic changes to the company's capital structure or ownership. However, news organizations have recently reported that D&B is no longer pursuing a sale of the company (media reports issued in July/August indicated the company was exploring a sale). Fitch believes the event risk of a leveraged buyout (LBO) of D&B (solicited or unsolicited) will be an overhang on the credit for the near term. Fitch has published today a scenario analysis that looks into the potential impact an LBO could have on the credit profile of D&B. The special report, 'An LBO Scenario of The Dun & Bradstreet Corp.' is available at 'www.fitchratings.com'. Fitch believes that a Private Equity (PE) sponsor would have to contribute at least $1 billion in equity to complete an LBO transaction. While this would constitute a substantial investment, PE firms have sufficient capital to make such a sizable contribution. Fitch believes initial unadjusted gross leverage would be high at 7x. New debt of $4 billion would be sizable and credit markets continue to be volatile. Fitch believes this would likely be one of the largest challenges in completing an LBO. PE has been active in the business-to-business industry. Recent LBOs of $1 billion or more include Hellman & Friedman's acquisition of 63% in Wood MacKenzie and Silver Lake and Warburg Pincus's acquisition of Interactive Data Corp for $3.4 billion. Fitch notes that holders of D&B's bonds benefit from a 101% put offer upon a change of control and subsequent downgrade to below investment grade; which may provide a floor for investors. The report includes an organizational chart, an event risk analysis, summary of debt covenants and a corporate governance overview. Additional information is available at 'www.fitchratings.com'. Applicable Criteria and Related Research: --'An LBO Scenario of The Dun & Bradstreet Corp.' (Dec. 12, 2012); --'Corporate Rating Methodology' (Aug. 8, 2012). Applicable Criteria and Related Research: An LBO Scenario of The Dun & Bradstreet Corp. Corporate Rating Methodology
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