S & P Places Solo Debt On Its "CreditWatch" -- With Developing Implications

Not at all unexpected -- and, to be clear -- it would be unlikely that the Dart transaction would materially hurt Solo's ratings, as part of the agreement (disclosed in the just-filed SEC Form 8-K) requires that Solo (at Dart's option) either pay-down, or run a tender offer for its 10.5% Senior Secured Notes due 2013, and/or its 8.5% Senior Subordinated Notes due 2014 (the higher coupon public debt), at or prior to closing.

In any event, here is the latest, as of about an hour ago, via Reuters:

. . .The CreditWatch listing follows Solo's announcement that it has signed a definitive agreement to be acquired by Dart Container Corp. (unrated) in a transaction valued at around $1 billion. The developing implications of the CreditWatch listing indicate that we could raise, lower, or affirm the ratings following further review of the transaction. An upgrade is possible if the transaction improves the company's business or financial profiles and, therefore, credit quality. We could also affirm the ratings if we view the combined company as having similar default prospects to Solo as a stand-alone company, or if the transaction does not close at all. We could lower the ratings in the unlikely event that the transaction results in a weaker financial profile, resulting in an increased risk of default. . . .

We will keep you posted.