Fitch Publishes An LBO Scenario of Dun & Bradstreet
NEW YORK -- December 12, 2012
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
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 &
Corporate Rating Methodology
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