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Moody's downgrades ATI
Moody's Investors Service said it lowered ATI Acquisition Co.'s corporate family rating and probability of default rating to Caa2 from B2, along with its senior secured credit facilities rating to B3 from Ba3 and subordinated credit agreement rating to Caa3 from Caa1.
The ratings also were placed under review for possible downgrade.
The downgraded ratings include the company's $17.5 million senior secured revolving credit facility due 2014 to B3 (LGD 2, 29%) from Ba3 (LGD 3, 30%); $155.5 million senior secured term loan due 2014 to B3 (LGD 2, 29%) from Ba3 (LGD 3, 30%); and $90 million subordinated credit agreement due 2015 to Caa3 (LGD 5, 84%) from Caa1 (LGD 5, 84%).
The downgrade was prompted by news that the Texas Workforce Commission's issued a notice of intent to revoke certificates of approval for schools owned by ATI, Moody's said.
The notice of revocation requires ATI to immediately cease enrollment of new students and initiate plans to complete the training programs of current students at all of ATI's Texas schools, the agency said.
The commission said the revocation is due to ATI's failure to submit accurate and verifiable documentation about student completion and graduation rates, Moody's said.
Previously, the commission had placed restrictions on three of the company's schools due to incorrect student employment information, the agency said.
The magnitude of the downgrade reflects the fact that ATI's Texas-based schools account for the bulk of its revenue and profitability, Moody's said.
The agency said it is concerned that these issues could threaten ATI's eligibility to receive Title IV funds.
The downgrade also reflects challenging operating conditions, including the soft economic environment and increased regulatory requirements that have contributed to a declining student population and weaker operating performance since late 2009, Moody's added.
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