S&P downgrades Outerwall

S&P said it lowered its corporate credit rating on Outerwall Inc. to B+ from BB-.

At the same time, S&P lowered its issue-level ratings on the first-lien revolver and term loan to BB- from BB. The recovery ratings remain at 2, indicating an expectation for substantial (70%-90%; lower half of the range) recovery in a payment default.

S&P said it also lowered its issue-level ratings on the company's unsecured notes to B- from B. The recovery ratings remain at 6, indicating an expectation for negligible (0%-10%) recovery in a payment default.

All of the ratings on Outerwall remain on CreditWatch, where they were placed with negative implications on March 16.

S&P said the downgrade follows Outerwall's announcement that it has signed an agreement to be acquired by Apollo Global Management in an all-cash deal for $1.6 billion.

“If the transaction is completed, we believe the company's financial policy will be more aggressive given that it will be owned by a private equity owner,” S&P said in a news release.

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