SLM remains on negative watch - S&P |
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Published
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Thu, 11 Oct 2007 18:17
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LONDON (Thomson Financial) - Standard & Poor's Ratings Services said its 'BBB+/A-2' counterparty credit rating on SLM Corp, or Sallie Mae, remains on negative watch.Recently, an investor group headed by JC Flowers & Co, which includes JPMorgan Chase Bank NA and Bank of America NA, announced that it does not plan to complete a leveraged buyout transaction with Sallie Mae under the original terms, the ratings agency said.The buyout group claims Sallie Mae's business has been seriously hurt by new government legislation and has revised its offer to 50 usd per share plus warrants from an original price of 60 usd per share, S&P said.This offer has now expired, increasing the likelihood that the merger transaction will fall apart. Sallie Mae has filed a lawsuit against the investor group requesting that the group complete the transaction according to the original terms or pay a termination fee of 900 mln usd.At this point, there is a reasonable probability that the dispute concerning what constitutes a material adverse effect will be settled in the courts, S&P said.'If the transaction is completed under the original merger agreement, the ratings on Sallie Mae will fall below investment grade, due to the sheer amount of debt that will have to be serviced. If the transaction is completed on modified terms, where the amount of debt created is reduced, this could potentially have positive ratings implications, but the final outcome is still likely to be noninvestment grade,' S&P said.TFN.newsdesk@thomson.comans/ranCOPYRIGHTCopyright Thomson Financial News Limited 2007. All rights reserved.The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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Acxiom's 'BB' rating remains on negative watch on cancelled buyout - S&P 