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S&P puts Scholastic on watch
Standard & Poor's said it placed its ratings on Scholastic Corp., including the BB corporate credit rating, on CreditWatch with negative implications.
The CreditWatch placement reflects the company's weak operating performance in the second quarter and its meaningful revision to earnings and cash flow guidance, the agency said. Scholastic now expects its cash flow from operations to be $55 million to $80 million for 2009 instead of $90 million to $100 million.
S&P is also concerned that reduced earnings could lead to a narrowing of headroom under the company's financial covenants. Scholastic ended the quarter with $30.8 million in cash, and its term loan due 2012 requires annual principal repayments of $42.8 million.
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