S&P downgrades MModal

Standard & Poor's said it lowered the corporate credit rating on MModal Inc. to D from B-, along with the ratings on its $250 million unsecured notes due 2020 to D from CCC.

The recovery rating for these notes remains at 6, indicating 0% to 10% expected default recovery.

The agency also said it lowered the ratings on the company's $520 million senior secured credit facilities, which consist of a $75 million revolving credit facility due 2017 and a $445 million term loan due 2019, to CC from B. The recovery rating remains at 2, indicating 70% to 90% expected default recovery.

The downgrade reflects that the missed interest payment on the unsecured notes due Feb. 18 constitutes a default under the agency's criteria, said David Tsui, an S&P analyst.

The company reported that it is currently engaged in discussions with certain of its lenders and bondholders to reduce its debt and has taken advantage of the interest payment's 30-day grace period to continue those discussions, Tsui said in a press release.

The company may restructure its debt given its highly leveraged capital structure, the analyst said.

If MModal chooses to make the interest payment within the 30-day grace period, or upon completion of a debt restructuring, Tsui said the agency will review and raise the rating.

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