S&P downgrades Securus first-lien debt

Standard & Poor's said it affirmed the B corporate credit rating on Securus Holdings Inc.

The agency also said it lowered the ratings on the company's upsized first-lien debt to B from B+ and revised the recovery ratings to 3 from 2 as a result of a higher debt claim in a default scenario.

The 3 recovery rating reflects 50% to 70% expected recovery in a default.

The proposed first-lien debt includes an upsized $40 million revolving credit facility due 2016 and an upsized $291 million term loan B due 2017.

S&P also said it affirmed the CCC+ ratings on the company's upsized $105.5 million second-lien debt due 2018. The recovery rating remains 6, indicating 0% to 10% expected recovery in a default.

The outlook is stable.

The proposed debt adds $60 million to the term loan B, $8.5 million to the second lien and $5 million of capacity to the revolving credit facility.

The company expects to use the additional debt, along with cash from the balance sheet, to primarily fund a $76.5 million dividend payment to the company's preferred shareholders, S&P said.

The ratings reflect the company's niche focus on a mature prison phone market and high debt, the agency said.

These risks overshadow the company's contracted recurring revenue stream, defensible competitive position, improving EBITDA margins and positive free operating cash flow, S&P said.

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