S&P Expects to Assgn 'BB-' Rtg to Middleweb PLC.

LONDON--(BUSINESS WIRE)--S&P's CreditWire 6/10/98--Standard & Poor's expects to assign its double-'B'-minus long-term corporate credit rating with a stable outlook to U.K. based Middleweb PLC, upon completion of its acquisition of The British Printing Company (BPC) and its combination with Watmoughs. Standard & Poor's also expects to assign its single-'B' rating to Middleweb's proposed UK140 million Senior Notes due 2008 and its double-'B'-minus rating to the subsidiary Webinvest Ltd.'s proposed UK395 million senior secured credit facilities.

Proceeds from the senior notes and the senior secured credit facilities will be used to partly finance the acquisition of BPC and Watmoughs by Webinvest and to refinance existing debt in those companies.

The ratings reflect Middleweb's leading position in the U.K. printing industry, offset by its leveraged financial profile. Middleweb is the largest independent printer in the U.K. and has leading market shares in colour supplements, magazines, and brochures. Middleweb benefits from strong and long-standing customer relationships. Printing facilities have generally been well invested.

However, Middleweb's management faces a number of challenges. The industry is competitive and cyclical, being affected to some degree by declines in consumer spending and advertising expenditure. It is also impacted by paper prices to some extent, mainly because high prices have tended to result in lower printing volumes. Having said this, Middleweb's larger customers tend to supply their own paper, and, where Middleweb supplies paper, it has some ability to pass price rises on. Middleweb must also manage the integration of BPC and Watmoughs, although it believes that significant cost savings are possible.

The group's financial profile is very aggressive. Pro forma lease adjusted debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) is 5.2 times (x), giving EBITDA interest coverage of 2.1x pro forma for the year to March 31, 1998. Coverage is expected to rise gradually as Middleweb repays debt and improves its free cash flow generation over time. OUTLOOK: Stable The outlook reflects Standard & Poor's expectation that Middleweb will retain its strong market positions, successfully integrate the two merging companies, and maintain its financial profile at the current level. ---CreditWire

CONTACT: Bob Ukiah, London (44) 171-826-3617

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