S&P downgrades Synagro

Standard & Poor's said it lowered Synagro Technologies Inc.'s corporate credit and $305 million senior secured bank facility to B+ from BB-. The recovery rating on the facility remains 4.

The outlook is stable.

The downgrade reflects S&P's concerns that recent delays in the startup of new facilities, higher utility and fuel costs and sizable dividend payments are likely to limit the company's discretionary cash flow, preventing credit measures from returning to levels appropriate for the former ratings. Therefore, the company will remain more highly leveraged for longer than previously expected. Total debt to EBITDA is about 5x.

S&P said the ratings on Synagro reflect its aggressive financial policies, narrow scope of operations and highly leveraged financial risk profile that heightens vulnerability to adverse weather conditions or other business disruptions.

These factors are partially offset by the company's position as the largest full-service provider in the fragmented wastewater residuals management industry and its efficient operations, the agency said.

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