S&P cuts Service King

S&P said it lowered its ratings for SK HoldCo LLC (Service King) and its senior secured debt to CCC- from CCC and its senior unsecured notes to C from CC.

The agency said it affirmed its assessment of Service King's liquidity as weak because of the July 1, springing maturity on its term loan, which will cause the entire $775 million term loan to become current if more than $135 million of its $375 million unsecured notes due Oct. 1, remain outstanding on that date.

“We continue to believe a debt restructuring is likely. Service King faces continued (albeit less so) weak collision volumes, increasing labor costs and elevated refinancing risks, thus we view a distressed exchange as increasingly likely as it seeks to address its capital structure and upcoming debt maturities,” S&P said in a press release.

The outlook is negative.

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