S&P cuts Quantum, gives loan B

Standard & Poor's said it lowered its corporate credit and subordinated debt ratings to B from B+ and CCC+ from B-, respectively, on Quantum Corp.

The downgrade reflects increased financial risk stemming from Quantum's partially debt-financed acquisition of Advanced Digital Information Corp. for $800 million, S&P added.

The outlook is stable.

At the same time, the agency said it assigned its B bank loan rating and 3 recovery rating to Quantum's proposed $500 million first-lien senior secured credit facilities, composed of a $150 million revolving credit line and $350 million term loan B.

S&P noted that the ratings on Quantum reflect increased financial leverage and debt servicing burdens resulting from the ADIC acquisition financing and relatively weak operating profitability stemming from mixed industry fundamentals and competition.

These factors are partially offset by the potential for an improved business position and incremental improvements in profitability and cash flow generation, resulting from cost cuts and synergies from the acquisition of ADIC, S&P added.

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