Moody’s lowers Transworld CFR, notes to Caa2

Moody's Investors Service said it downgraded the corporate family rating of Transworld Systems, Inc. to Caa2 from B3 and the ratings on its $440 million second-lien notes to Caa2.

The outlook is negative.

Moody’s said the downgrade of the corporate family rating to Caa2 captures the strain on Transworld’s profits and liquidity caused by the abrupt changes in the Department of Education's (DoE) policies for remediating defaulted student loans and for remunerating collection agencies, and by market-share losses in Transworld’s healthcare segment due to poor execution.

The agency expects the impact from the DoE's policy shift, which has caused revenues to fall by double-digit percentages from a year ago, will continue to be felt through the rest of 2015 and into 2016.

Moreover the company, with a CEO and CFO who just joined this year, is faced with uncertainty not only with regard to timing, but as to whether the DoE, in its new contract awards, will even include Transworld, which has performed slightly below the DoE's standards, Moody’s said.

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