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S&P downgrades Cengage
S&P said it lowered its corporate credit rating on Cengage Learning Holdings II Inc. to B- from B.
The outlook is stable.
At the same time, the agency lowered the issue-level rating on the company's $250 million asset-based lending revolving credit facility to B+ from BB-. The recovery rating remains 1, indicating an expectation for very high recovery (90%-100%; rounded estimate: 95%) of principal in the event of a payment default.
The agency also lowered its issue-level rating on Cengage's first-lien term loan to B from B+. The recovery rating remains 2, indicating an expectation for substantial recovery (70%-90%; rounded estimate: 70%).
In addition, S&P lowered its issue-level rating on the company's senior notes to CCC from CCC+. The recovery rating remains 6, indicating an expectation for negligible recovery (0%-10%; rounded estimate: 5%).
The agency said the downgrade reflects Cengage's weak operating performance, high debt burden and an expectation that leverage will remain above 8x and free operating cash flow to debt will remain below 5% through fiscal 2019.
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