S&P changes UKG outlook to negative

S&P said it changed its outlook for UKG Inc. to negative from stable and affirmed all its ratings on the company, including the B- on the first-lien term loan and CCC rating on its second-lien term loan.

“UKG continues to rapidly scale its revenue base with higher proportions of subscription revenue, which will likely benefit its future operating prospects. However, the growth investments driving this and the costs of remedying a ransomware incident have compressed profitability. Due to lower levels of profitability, the interest burden on the company's significant debt load, and the aggressive financial policies it has pursued, UKG has run a cash flow deficit and maintained weak credit metrics over the last 15 months,” the agency said in a press release.

The negative outlook reflects the possibility of a downgrade unless expected revenue growth and profitability improvements do not appear and operating performance is inadequate to support sustained deleveraging and improving levels of free cash flow generation, which S&P said it considers necessary for UKG to pay its debt and satisfy ongoing liquidity requirements.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.