S&P downgrades Output Services

S&P said it lowered the issuer credit rating on Output Services Group Inc. to B- from B, along with its debt ratings by one notch, and placed all of the ratings on CreditWatch with negative implications.

OSG Intermediate Holdings Inc., Output Services Group's intermediate parent company, guarantees a £208 million bridge 364-day term loan due Dec. 13, 2019, that supported the acquisition of Communisis plc.

The company is exploring refinancing options for the bridge loan, including plans to issue debt in the United States and Europe, S&P explained.

But the timing, amount and overall ability to achieve the refinancing remain unclear, the agency said.

The company will launch its refinancing process soon, but S&P said it believes the shrinking refinancing window increases the refinancing execution risk.

Although the bridge loan was borrowed outside of the credit group that supports Output's debt financing, a default of the bridge term loan will negatively impact the consolidated group's overall creditworthiness, the agency said.

The CreditWatch placement signals the high likelihood will lower the ratings by one or more notches over the next three months if the company is unable to refinance its bridge facility, S&P said.

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