OREANDA-NEWS. Univision Communications Inc.'s (UVN) 'B' Issuer Default Rating (IDR) is unaffected by its announcement that it plans to convert $1.125 billion of debentures held by Grupo Televisa (Televisa) to equity and that the company has filed for an IPO, according to Fitch Ratings. The company expects to use proceeds from the IPO to repay debt. A complete list of Fitch's ratings on Univision is provided at the end of this release.

Although Fitch recognizes that these events are all credit positives, they are insufficient to warrant a ratings change at this time. Pro forma for the debentures conversion, estimated net IPO proceeds and cash consideration paid by UVN to Televisa for the debt conversion, Fitch calculates that total leverage improves from 8.9x to 7.9x while net leverage improves from 8.6x to 7.8x. A positive rating action would coincide with total leverage being reduced below 7.0x. Fitch would consider a positive outlook if IPO proceeds are sufficient enough to reduce leverage below 7.5x and we see a reasonable path to delevering below 7.0x. Fitch will revisit the rating once final net IPO proceeds and resultant debt repayment amounts are finalized.

UVN will be converting $1.125 billion of debentures held by Televisa into warrants that are exercisable for new class of UVN's common stock. The debentures were issued in 2010 as part of a renegotiation of the Program Licensing Agreement (PLA) between the two entities and were convertible into 30% equity stake in UVN at Televisa's option. Televisa also received an option to acquire an additional 5% at fair market value at the time of exercise. The conversion, which will reduce annual interest expense by $16.7 million, is taking place simultaneously with an amendment to the PLA that will reduce the annual royalty rate on substantially all of UVN's Spanish-language media networks revenue paid to Televisa and extend the current expiration date from 2025 to 2030.

UVN has also announced that it has filed for an IPO. The company did not disclose the number of shares or the price range, but they stated the traditional $100 million figure to calculate registration fees in their offering. Market indications released earlier this year suggested the company could raise more than $1 billion. The S-1 states that the use of proceeds will be paying down indebtedness.

Fitch currently rates UVN as follows:

--Issuer Default Rating 'B';
--Senior secured 'B+/RR3';
--Senior unsecured 'CCC+/RR6'.