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S&P cuts Language Line, loans
Standard & Poor's said it lowered its ratings, including its corporate credit rating, on Language Line Holdings LLC to B- from B.
The outlook is negative.
At the same time, the agency lowered its rating on the senior secured first-lien term loan to B- from B. The recovery rating is 3, indicating an expectation of a meaningful (50% to 70%) recovery in the event of a payment default.
S&P also lowered the rating on the second-lien term loan to CCC from CCC+. The recovery rating is 6, indicating an expectation of a negligible (0%-10%) recovery in the event of a payment default.
"We are downgrading Language Line to B- as a result of the company's inability to complete its proposed capital structure refinancing," S&P credit analyst Peter Bourdon said in a news release.
"We previously upgraded Language Line to B from B- on April 21, 2014, based on our expectation of an increased cushion of compliance with its total leverage covenant. Since the refinancing was not completed, the company is still subject to its 2010 credit agreement, which includes aggressive step-downs in the total leverage covenant. As of March 31, 2014, the company was in compliance with its total leverage covenant, but the EBITDA cushion was less than 5%."
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