S&P ups Knowledge notes to CCC

Standard & Poor's said it affirmed the CCC corporate credit rating on Knowledge Universe Education LLC and removed the ratings from CreditWatch, where they were placed on July 12 with positive implications.

At the same time, the agency raised its issue-level rating on the company's $260 million 7¾% senior unsecured notes due 2015 to CCC from CCC-. The recovery rating as revised to 4, indicating an expectation for average (30% to 50%) recovery for lenders in the event of a payment default, from 5. The recovery rating revision reflects the expectation for slightly better recovery prospects, given the recent change in our valuation methodology to a going concern basis rather than the discrete asset approach.

In addition, S&P withdrew its B- issue-level rating on the company's proposed $267 million term loan due 2019 and a $75 million revolving credit facility due 2018, as the company is no longer marketing this transaction.

"Our rating action reflects the company's need to successfully execute a debt refinancing prior to the June 2014 revolver and February 2015 senior notes maturities," S&P credit analyst Hal Diamond said in a news release.

"We think that the company likely needs to significantly improve operating performance to accommodate a refinancing of its 2015 senior notes maturity."

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