S&P assigns Output Services B-

S&P said it assigned B- ratings to Output Services Group Inc. and its new $135 million second-out term loan due 2028. The 4 recovery rating reflects average recovery (30%-50%, rounded estimate: 35%) in default. The agency also gave B+ issue-level and 1 recovery ratings to its new $50 million super senior first-out term loan due 2028. The 1 recovery rating reflects very high recovery (90%-100%, rounded estimate: 95%) if OSG defaults. The outlook is stable.

The company emerged from Chapter 11 in November.

“The B- credit rating on OSG reflects its small scale, lack of diversified product offerings, minimal digital footprint, and core print offering that is in secular decline. In addition, the rating reflects the company's high S&P Global Ratings-adjusted leverage above 5x and the company's history of operational underperformance,” S&P said in a statement.

The outlook reflects a forecast for the company to deliver moderate levels of free operating cash flow under its new capital structure and preserve adequate liquidity over the next 12 months, the agency said.

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