S&P lowers Workflow to SD, loan to D

Standard & Poor's said it lowered its corporate credit rating on Workflow Management Inc. to SD (selective default) from CC and its $140 million second-lien term loan to D from C.

The agency also revised the recovery rating on the company's $40 million secured revolving credit facility and $275 million first-lien term loan to 2 from 1 and affirmed the issue-level rating on the first-lien debt at CCC.

The agency said the rating actions follow the amendments to the company's first- and second-lien credit facilities. S&P views the terms of the amendment, relative to the second-lien facility, as not fulfilling the obligation in accordance with its original terms - particularly because interest under the second-lien notes will be paid in kind during the next year, whereas most of it is currently paid in cash.

The agency views the amendment of the second-lien facility as tantamount to default given the distressed financial condition of the company and S&P's previously stated concerns around Workflow's ability to service its capital structure, absent this amendment and the resultant change to full PIK interest.

S&P expects that it will raise the corporate credit rating to CCC- following a reassessment of the company's revised capital structure.

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