S&P lowers Learfield

S&P said it downgraded the ratings on Learfield Communications LLC and its first-lien credit facilities to CCC+ from B-. The rating on the second-lien term loan was cut to CCC- from CCC. S&P removed the ratings from CreditWatch with negative implications. The outlook is negative.

“The downgrade reflects Learfield's very high leverage, thin liquidity, and thin covenant cushion. We expect Learfield's EBITDA will decline significantly and reported total debt to EBITDA will be about 9x in fiscal 2020, improving to the mid-8x area in fiscal 2021. Very high anticipated leverage makes the company vulnerable to any currently unanticipated operating missteps or an unexpected downturn in the economy. Learfield will also likely have a very thin cushion in its 7.5x first-lien net leverage covenant ratio and could be at risk of violating this covenant by the end of fiscal 2020 in June.

S&P said it believes Learfield could amend the covenant if needed, but this would increase interest costs or require one-time fees.

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