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S&P cuts Sotera Defense, loans to CCC
Standard & Poor's said it lowered its corporate credit rating on Sotera Defense Solutions Inc. to CCC from CCC+.
The outlook is negative.
At the same time, the agency lowered its issue-level rating on the company's $243 million senior secured facilities (consisting of a $28 million revolving credit facility due 2016 and a $215 million term loan due 2017) to CCC from CCC+. The recovery rating on this debt remains 3, indicating expectations for meaningful (50% to 70%) recovery in the event of payment default.
S&P said the downgrade reflects its view that the revenue decline in both the Force Mobility & Modernization Services and Technology & Intelligence Services business segments would likely continue over the next few quarters, given the government shutdown this quarter and the ongoing federal defense budget and debt ceiling uncertainties, significantly increasing the risk of future covenant violations (absent an amendment to its existing credit agreement providing additional covenant headroom).
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