Fitch Places Dex Media Inc. and Dex Media East & West on Rating Watch Negative

Business Wire, Oct 3, 2005

CHICAGO -- Fitch Ratings has placed all of the ratings of Dex Media Inc. (Dex) and its subsidiaries, Dex Media East LLC (DXME) and Dex Media West LLC (DXMW), on Rating Watch Negative. The rating action affects approximately $5.5 billion of outstanding debt at June 30, 2005. A list of the company's ratings can be found below.

The rating action reflects today's announcement that R.H. Donnelly (RHD) has entered into a definitive agreement to acquire Dex for approximately $4.2 billion as well as the assumption of outstanding debt of Dex and its subsidiaries. Debt is expected to increase at the combined company by $2.3 billion to fund the cash portion of the transaction, as well as redeem all of the outstanding Goldman Sachs preferred stock, increasing leverage as defined as total debt to operating EBITDA to approximately 7.0 times (x). The transaction is expected to close in the first quarter of 2006. Management has stated that free cash flow in the newly formed entity will be predominantly dedicated to debt reduction targeting a leverage ratio of 5.5x in 2008. While the above transaction pressures the company's compliance with covenants in both bank facilities and bond indentures, the company has obtained a $10.4 billion back stop facility from JP Morgan in the event of such violation.

Resolution of Fitch's Rating Watch will be determined by an evaluation of the combined company's long-term fiscal policies, including debt reduction plans and dividend policies, in addition to operating efficiencies and integration plans. The financial risk associated with the high projected debt levels will be balanced against the company's expanded scale, enhanced geographic and customer diversity, and an evaluation of its strategies to compete with online competitors.

Fitch has placed the following ratings on Rating Watch Negative:

Dex Media, Inc.

-- Issuer default rating (IDR) 'B';

-- $500 million 8% notes due 2013 'CCC';

-- $750 million 9% discount notes due 2013 'CCC'.

Dex Media East, LLC

-- IDR 'B';

-- $1.1 billion senior secured credit facility 'BB';

-- $450 million 9.875% senior unsecured notes due 2009 'BB-';

-- $525 million 12.125% senior subordinated notes due 2012 'B-'.

Dex Media West, LLC

-- IDR 'B';

-- $2.1 billion senior secured credit facility 'BB';

-- $385 million 8.5% senior unsecured notes due 2010 'B';

-- $300 million 5.875% senior unsecured notes due 2010 'B';

-- $780 million 9.875% senior subordinated notes due 2013 'CCC '.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.