DBRS Downgrades Quebecor Media Inc.’s Senior Notes to B (high) Following Refinancing

DBRS has today confirmed Quebecor Media Inc.’s (QMI or the Company) Issuer Rating at BB (low) and its Secured Bank Debt rating at BB (high), with a recovery rating of RR1, and has downgraded the Company’s Senior Notes rating to B (high) from BB (low) based on the Senior Notes’ recovery prospects in a default scenario falling from RR4 to RR5. These actions follow the Company’s announcement that it will raise approximately $350 million of Secured Bank Debt. Concurrently, the Company is redeeming a portion of its 7.75% unsecured Senior Notes due 2016 with cash on hand.

Given that the Company is issuing Secured Bank Debt and concurrently redeeming a portion of its unsecured Senior Notes at the QMI holding company level, DBRS has concluded that holders of the Senior Notes are now likely to recover between 10% and 30% of their value in a default scenario (as opposed to 30% to 60% prior to the Company’s financing actions) – a level that corresponds with a recovery rating of RR5. As such, in accordance with the “DBRS Recovery Ratings for Non-Investment Grade Corporate Issuers” criteria, DBRS has downgraded the Company’s Senior Notes rating to B (high) from BB (low), one notch below the Issuer Rating of BB (low).

Notes:
All figures are in Canadian dollars unless otherwise noted.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodologies are Rating Companies in the Publishing Industry, Rating Companies in the Communications Industry, Rating Companies in the Printing Industry, Rating Holding Companies and Their Subsidiaries and DBRS Recovery Ratings for Non-Investment Grade Corporate Issuers, which can be found on our website under Methodologies.