S&P assigns BB+ rating to Activision Blizzard

Associated Press

CHICAGO (AP) -- Standard & Poor's Ratings Services on Tuesday assigned video game publisher Activision Blizzard Inc. a junk-grade "BB+" corporate credit rating and said the outlook is stable.

Activision, based in Santa Monica, Calif., is one of the largest video game makers, with well-known games such as "Call of Duty" and "World of Warcraft."

The company is in transition as French conglomerate Vivendi SA, its largest shareholder, said in July that it is selling off its stake in the company for $8.2 billion.

Vivendi will sell 429 million of its shares to Activision itself and another 172 million shares will be sold to a consortium of key investors, including Activision's CEO Bobby Kotick and co-chairman Brian Kelly. After the transaction, Vivendi will hold about 12 percent of the company's stock.

S&P said that Activision deserved the "BB+" corporate credit rating, which is one notch below investment grade status, or "junk," because of fairly stable operating performance. It noted that the company faces tough competition from other video game makers and competition for consumer's leisure time.

The rating agency also assigned a "BBB" rating to Activision's proposed senior secured credit facilities and $1 billion senior secured notes that are due in 2020. This rating is two notches higher than its corporate credit rating, and is considered investment grade.

S&P also assigned a "BB+" rating to the company's proposed $1 billion senior unsecured notes due in 2021 and $500 million senior unsecured notes due in 2023.

Activision announced the debt offerings Tuesday and the rating agency said the proposed transaction will help the company repurchase the 429 million shares from Vivendi.

Activision's shares increased 66 cents, or 4 percent, to close Tuesday trading at $16.98. The stock has traded between $10.45 and $18.43 in the past 52 weeks, and is up 60 percent since the start of the year.