Dell Inc. (NASDAQ:DELL) bonds have been downgraded to a junk rating by Standard & Poors’. The news comes just one day before a meeting that will see shareholders vote on a debt fueled deal that would see the company privatized. News from Bloomberg earlier today indicated that the shareholder vote would likely approve the buyout deal.
The news about the downgrade to junk was also broken by Bloomberg earlier. The junk rating means that it will be more expensive for the company to raise debt, and that could be a bad omen as the company heads toward life as a private enterprise.
Today’s downgrade puts Dell debt at BB- on the Standard & Poor’s rating system. that puts the company’s debt firmly in junk territory. The ratings agency said that its outlook on Dell Inc. (NASDAQ:DELL) was stable going forward. The impetus for the downgrade came as the privatization of the company looks certain.
The downgrade from Standard & Poor’s comes just one day after Fitch downgraded Dell Inc. (NASDAQ:DELL) debt. Yesterday the ratings agency cut Dell debt to double-B-minus, three levels into junk territory.
Dell shareholders will vote on a $24.9 billion privatization deal tomorrow that will see founder Michael Dell and a group of private investors take complete control of the company for $12.75 per share. Today it looks like the group has secured enough votes to allow the deal to go through.
The buyout has been contested for months by investors led by Carl Icahn. The activist battle at the company has led to the offer for the company being increased, and a special dividend being attached to each share in the deal. Carl Icahn officially gave up his fight to block the privatization just two days ago.