S&P revises AAC Holdings view to negative

S&P said it revised its outlook on AAC Holdings Inc. to negative from positive and affirmed its B- issuer credit rating on the company.

At the same time, S&P affirmed the B- issue-level rating on the company's senior secured credit facility, which comprises a $55 million revolving credit facility due 2022 and a $275 million term loan B due 2023. The 3 recovery rating remains unchanged, indicating an expectation for meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a payment default.

“The negative outlook reflects the risk that the company will underperform our base-case projections given the uncertainty around the timing and pace of investments needed to resolve the internet marketing issue. It also reflects the risk that AAC may breach its leverage covenant if its EBITDA does not recover, especially because the covenant will step down in the first quarter of 2019,” S&P said in a news release.

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