S&P downgrades Cegedim

Standard & Poor's said it lowered to BB- from BB the long-term corporate credit rating on Cegedim SA, along with the rating on its €300 million unsecured notes due 2015 to BB- from BB.

The recovery rating remains unchanged at 3, indicating 50% to 70% expected recovery for creditors in the event of a payment default.

The outlook is negative.

The downgrades follow the company's lowering of its revenue forecast for 2011 to 0% from 2% on a like-for-like basis, S&P said.

The agency said it sees this weakening in revenues as potentially continuing into 2012.

S&P also said it revised Cegedim's financial risk profile to aggressive from significant, reflecting a view that the company's free operating cash flow generation is likely to be weaker than anticipated. As such, it will barely cover debt amortization payments next year.

The company's leverage is expected to remain high at about 4.1x on an adjusted basis at year-end 2011, but it could decline to about 3.7x in 2012, the agency said.

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