TEXT-S&P : Nuveen Investments rtgs unaffected by refi plan

Wed Jan 16, 2013 9:05am EST

Jan 16 - Standard & Poor's Ratings Services today said its ratings and outlook on Nuveen Investments Inc. (B-/Stable/--) are unaffected by the asset manager's announcement to refinance its $2.6 billion term loans. Although the transaction will reduce the company's debt expense and improve its cash flows, Nuveen's extremely heavy debt burden and weak credit metrics remain the key negative factors for the ratings. As of Sept. 30, 2012, Nuveen had $4.5 billion of debt outstanding. EBITDA interest coverage based on the first nine months of 2012 and debt leverage based on the annualized first nine months of 2012 were 1.4x and 9.4x, respectively. With the approximately $17 million of interest expense savings, pro forma EBITDA interest coverage for the first nine months of 2012 would be 1.5x.

The $2.6 billion term loans that Nuveen is seeking to refinance consist of a $1.2 billion new extended first-lien term loan, a $1.1 billion extended first-lien term loan, and a $0.3 billion incremental first-lien term loan. The company will replace three tranches with a $2.6 billion new first-lien term loan that matures in May 2017 and is priced at LIBOR plus 500 basis points, with no LIBOR floor. The loan has the same as existing 5.75x maximum net first-lien leverage covenant and the same amortization. Nuveen estimated the cost of the transaction at $9 million.

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