S&P trims Goodman Networks

Standard & Poor's said it cut its corporate credit rating on Goodman Networks Inc. to CCC+ from B-. The outlook is negative.

At the same time, S&P lowered its issue-level rating on the company’s senior secured notes to CCC+ from B-. The recovery rating remains 4, indicating the agency’s expectation for average (30%-50%; higher end of the range) recovery in the event of a default.

“The ratings downgrade is based on Goodman’s weak operating and financial performance over the past nine months, and our view that the company’s capital structure may be unsustainable longer term, leading to a potential restructuring or distressed debt exchange over the next couple of years if the company does not substantially improve its EBITDA from 2015 levels,” said S&P credit analyst Scott Tan, in a news release.

Although near-term liquidity should cover uses in 2016 and S&P expects the company to improve its EBITDA in 2016 from 2015, absent meaningful improvement in business performance, the agency believes the company may be challenged to make its interest payments in future years if financial results do not improve and, ultimately, refinance its upcoming $325 million of senior secured notes due 2018.

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