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S&P drops Language Line view to negative
Standard & Poor's said it revised its outlook on Language Line Holdings Inc. to negative from stable because of persistent high debt leverage, declining profitability and the thin margin of covenant compliance that results from required leverage step-downs over the next year.
Affected ratings include the B corporate credit and CCC+ senior discount notes.
S&P noted revenues declined 1% in the three months ended June 30 and EBITDA fell about 8% because of increased sales expenses and higher audit- and tax-related fees.
S&P added the ratings on Language Line Holdings and its Language Line Inc. operating subsidiary reflect the company's participation in the price-competitive, over-the-phone interpretation market and its high debt leverage resulting from the $716 million, largely debt-financed acquisition of the company in 2004.
The agency said these concerns are only partially mitigated by the company's good position in the outsourced market and its moderate discretionary cash flow.
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