Fitch Places ServiceMaster's 'BBB-' IDR on Rating Watch Negative.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has placed The ServiceMaster Company's (ServiceMaster) 'BBB-' IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. and senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. ratings on Rating Watch Negative. Approximately $873 million of debt outstanding at Sept. 30, 2006 was affected by this action. The rating action reflects today's announcement that the company intends to explore a range of strategic alternatives, including a possible sale of the company, and has retained Morgan Stanley  To comply with Wikipedia's , the introduction of this article needs a complete rewrite. and Goldman Sachs as advisors. Management indicated that the Board would consider a sale of the company if it viewed the valuation as superior to the value the company could achieve for shareholders through execution of its updated business plan. While there are numerous possible outcomes from this announcement, Fitch believes that on balance there is a higher likelihood of a negative outcome for bondholders. Fitch believes today's announcement represents a possible departure from management's prior commitment to investment grade ratings. While there is a possibility that a higher rated company could acquire ServiceMaster or the company could choose to pursue its updated operational business plan, Fitch believes over the long-term the most likely outcome of the strategic review will be negative for bondholders. The Negative Rating Watch will be resolved after Fitch's operational, strategic and financial review related to any proposed transaction. All outstanding debentures and notes were issued under the 1997 Indenture, which does not provide any material restrictions related to additional debt, change of control or sale of assets, nor does it contain any cross-default or cross-acceleration provisions. ServiceMaster's bank facility contains a maximum leverage ratio of 3.25 times (x) and a minimum interest coverage ratio of 4.00x, as well as a change of control provision. Fitch notes that the ServiceMaster Indenture does contain a Negative Pledge Negative Pledge An agreement in which the borrower agrees not to pledge any of its assets as security and/or not to incur further indebtedness. covenant, which provides some level of protection for bondholders. However, given actions that some other companies across the corporate space have taken recently to subvert certain protections, Fitch is generally skeptical regarding the potential effectiveness of some covenants in corporate bond indentures. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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