S&P cuts Mac-Gray outlook to negative

Standard & Poor's said that it revised its outlook on Mac-Gray Corp. to negative from stable.

At the same time, the agency said it affirmed the BB- corporate credit rating, lowered the issue rating on the company's senior unsecured notes to B from B+ and revised the recovery rating to 6 from 5.

The outlook revision reflects its belief that the weaker economy and its effect on rental vacancy rates will challenge the company's operating performance and its ability to maintain credit measures within its expectations, S&P noted.

Mac-Gray announced that it expects revenues to be lower in 2009, including a 20% decline in its product sales division, which accounted for about 16% of its 2008 revenues, the agency said, adding that the ratings on Mac-Gray incorporate the company's active acquisition strategy, moderately high leverage, and relatively narrow business focus.

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