S&P hikes Digital Media

S&P said it raised its ratings for Digital Media Solutions Inc. and its senior secured debt from SD, selective default, and D, respectively. The agency also reduced the recovery rating to 4, indicating an average recovery of 30%-50% in default from 3 indicating a meaningful recovery of 50%-70%.

The upgrade follows the recent completion of the review of DMS after its recent credit amendment, S&P said.

“DMS increased its financial flexibility with its recent credit amendment that provided covenant relief and allows it to convert its next four interest payments to PIK from cash. We expect the company is highly likely to exercise the PIK option. However, substantial pressure on the business remains. DMS' credit metrics remained challenged the past 12 months, and we expect they will remain pressured for the foreseeable future with limited visibility into a potential recovery,” S&P said in a press release.

S&P noted DMS’ term loan is trading at around 75 cents on the dollar. “The significant discount associated with the value of the company's term loan increases the potential that the company could look to negotiate some form of a subpar debt exchange or out-of-court restructuring in order to increase its financial flexibility. We would view any type of distressed exchange in which the lenders receive less than originally promised as a default.”

The outlook is negative.

© 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.