Moody's slices Digital Media Solutions

Moody's Investors Service said it downgraded Digital Media Solutions, LLC's corporate family rating to Caa1 from B2, probability of default rating to Caa2-PD from B3-PD and the ratings on the senior secured bank credit facilities, consisting of a $50 million revolving credit facility and $225 million term loan, to Caa1 from B2.

Moody's also assigned a speculative grade liquidity rating of SGL-4 and revised the outlook to negative from stable.

“The downgrade reflects DMS' high financial leverage and negative free cash flow generation expected over the next 12 months resulting from the company's deteriorating operating performance. DMS experienced a pullback in advertising spend especially in its insurance vertical from the backdrop of macroeconomic headwinds and high inflation. This lowered overall EBITDA and Moody's adjusted financial leverage rose sharply to 9.3x as of the 12 months end-September 2022 from 5.2x in 2021. Moody's projects leverage to remain elevated at above 10x for the next 12 months,” the agency said in a statement.

Additionally, Moody’s noted there is a substantial risk of DMS breaching its covenant without an equity investment or credit pact amendment.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.