Moody's changes SumTotal outlook to negative

Moody's Investors Service said it changed SumTotal Systems, Inc.'s outlook to negative from stable and affirmed its corporate family rating at B2, probability of default rating at B2-PD, senior secured credit facilities due 2017 and 2018 at B1 (LGD3, 35%) and senior secured credit facility due 2019 at Caa1 (LGD5, 88%).

The agency said the change in outlook is driven by the company's below-plan performance and concerns that the trend will continue for an extended period. The ratings could be downgraded if the company's decline in revenue, EBITDA and cash flow does not show signs of abating or if leverage is expected to remain above 6.5 times for an extended period.

More positively, the company has paid down debt faster than required and still retains a sizable cash position, Moody's said, and liquidity is good based on September cash levels, an undrawn $30 million revolver and expectations of continued positive free cash flow.

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