(The following statement was released by the rating agency)

Nov 30 - Standard & Poor's Ratings Services said today that it has assigned

its 'BB-' issue ratings to the $1 billion senior secured notes and EUR500

million senior secured notes issued by Unitymedia Hessen GmbH & Co. KG and

Unitymedia NRW GmbH. The issuers are operating subsidiaries of German Cable

Operator Unitymedia KabelBW GmbH (Unitymedia; B+/Stable/--)

The recovery rating on the senior secured notes is '2', indicating our

expectation of substantial (70%-90%) recovery prospects for secured lenders in

the event of a payment default. However, we continue to see coverage of the

senior secured notes at the low end of the range, with no headroom for

additional senior secured issuance.

The issue and recovery ratings on Unitymedia's existing senior secured notes

(issued by Unitymedia Hessen and Unitymedia NRW) remain unchanged at 'BB-' and

'2', respectively. The issue and recovery ratings on the existing senior notes

also remain unchanged at 'B-' and '6', respectively.

We understand that the proceeds of the senior secured notes will be used to

repurchase the existing senior secured dollar-denominated notes maturing in

2017 and part of the euro-denominated notes maturing in the same year. We

anticipate that the total amount of senior secured debt will remain about the

same.

Our issue and recovery ratings on the senior secured notes reflect our

assessment of Unitymedia as a going concern, owing to its resilient and

profitable utility-like cable TV operations in Germany, its 'satisfactory'

business risk profile, its valuable cable network and customer base, and high

barriers to entry in the consolidated cable industry. In addition, we consider

that recovery prospects for the senior secured notes are supported by the

notes' relatively comprehensive security package, with network assets pledged.

Our simulated default scenario assumes a default would occur in 2017, when the

remaining euro-denominated senior secured notes and the group's revolving

credit facilities mature. We believe this scenario would occur due to

excessive leverage as a result of operating underperformance. We envisage

EBITDA falling to about EUR600 million in the hypothetical year of default, with

a stressed enterprise value of about EUR3.45 billion.

From our stressed enterprise value of EUR3.45 billion, we deduct priority

liabilities of about EUR330 million, comprising administrative expenses, the

existing EUR80 million super senior revolver (assumed fully drawn in 2017), and

other priority liabilities related to finance leases. This leaves

approximately EUR3.1 billion of value remaining for senior secured noteholders.

We envisage about EUR4.4 billion of senior secured debt outstanding at default

(including six months' prepetition interest), indicating substantial (70%-90%)

recovery prospects for these lenders, albeit at the low end of this range. We

would therefore expect negligible (0%-10%) recovery prospects for senior

noteholders, reflected in our recovery rating of '6' on the existing senior

notes.

RELATED CRITERIA AND RESEARCH

All articles listed below are available on RatingsDirect on the Global Credit

Portal, unless otherwise stated.

-- Unitymedia GmbH, May 31, 2012

-- Criteria Guidelines For Recovery Ratings On Global Industrials

Issuers' Speculative-Grade Debt, Aug. 10, 2009

RATINGS LIST

New Rating

Unitymedia Hessen GmbH & Co. KG

New Rating

Unitymedia Hessen GmbH & Co. KG

Senior Secured

EUR500 mil bnds due 01/15/2023 BB-

Recovery Rating 2

US$1 bil bnds due 01/15/2023 BB-

Recovery Rating 2

Unitymedia NRW GmbH

Senior Secured

US$1 bil bnds due 01/15/2023 BB-

Recovery Rating 2

EUR500 mil bnds due 01/15/2023 BB-

Recovery Rating 2

(Caryn Trokie, New York Ratings Unit)

Keywords:

(Caryn.Trokie@thomsonreuters.com; 646-223-6318; Reuters Messaging: rm://caryn.trokie.reuters.com@reuters.net)

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