S&P lowers American Dental

Standard & Poor's said it lowered the corporate credit rating on American Dental Partners Inc. to B- from B, along with the rating on its senior secured debt to B- from B.

The recovery rating on this debt remains unchanged at 3, indicating 50% to 70% expected default recovery.

The outlook is negative.

The ratings continue to reflect the company's vulnerable business risk profile, characterized by its narrow scope of operations in intensely competitive and somewhat cyclical markets with low barriers to entry, S&P said.

The agency said it believes it will be challenging for ADP to achieve moderate growth and lowered its expectations for ADP's EBITDA generation and cash flow over the next year, mainly because it does not expect near-term profit margin improvement.

The negative outlook reflects the possibility that American Dental will exhaust its revolving credit facility or violate a loan covenant over the next year, given the expectation for negative cash flow, S&P said.

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