S&P puts IKON Office on negative watch

Standard & Poor's said it placed its BBB- corporate credit and senior unsecured debt ratings and BB+ rated subordinated debt, on IKON Office Solutions and its wholly owned subsidiary IOS Capital LLC on CreditWatch with negative implications.

S&P said the CreditWatch listing reflects the company's recent announcement that it has entered into an asset purchase and lease financing agreement with unrated GE Vendor Financial Services.

Although the agreement will bolster near-term liquidity, substantially eliminate equipment financing risk, and provide fee income, the CreditWatch listing reflects the uncertain use of proceeds and a potential reduction in operating earnings. In addition, S&P said it remains concerned about IKON's near-term profitability trends and ability to sustain an investment-grade financial profile.

Valley Forge, Pa.-based IKON has a strong, but not leading, market position, offset by highly competitive conditions in the mature office equipment and document management solutions market.

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